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Recent Census data derived from the Survey of Income and Program Participants (SIPP) found that in 2017 (the most recent year), 19 percent of U.S. households carried medical debt and had a median debt amount of $2,000. The study revealed that 27.9 percent of Black households and 21.7 percent of Hispanic households had medical debt in comparison to 17.2 percent of white non-Hispanic households. Debt collection lawsuits have also been found to be disproportionately prevalent in communities of color. Medical debt and collection actions, therefore, further perpetuate racial inequities by limiting economic opportunities and further contributing to the wealth divide.
The COVID-19 pandemic has certainly exacerbated issues with medical debt in the U.S. Although federal relief provided for COVID testing and vaccinations free of charge to all individuals, and some insurers waived treatment co-pays, many Americans still found themselves with overwhelming medical debt related to COVID-19. Even during the height of the pandemic and the economic recession that has ensued, some hospitals continued suing patients for medical debt. According to a study conducted by John Hopkins University, at least 16 hospital institutions continued to take legal action during the first seven months of 2020.
Getting an unexpectedly large bill and a summons to appear in court after receiving medically necessary care can be paralyzing. For many Americans, it means taking time off from work, paying for transportation and parking, and hoping you can present your case effectively if you cannot afford legal representation. The Pew Charitable Trust reviewed debt collection lawsuits from 2010 to 2019 and found that less than 10 percent of defendants had any legal counsel, although nearly all plaintiffs had legal representation. The few defendants who did have legal representation were found to be much more likely to reach a mutual settlement. Many hospitals have been criticized for taking legal action; some are continuously tacking on daily interest fees to the debt and some are holding patients responsible for the hospital’s legal fees associated with taking them to court.
