What If Canceling Medical Debt Doesn’t Help Patients? 

As reported in Vox, a surprising new study indicates that erasing medical debt does not significantly improve patients’ financial or health outcomes. Read the full article and report here

Study Overview 
Despite the prevalent belief that canceling unpaid medical bills would benefit patients, recent research suggests otherwise. The study, conducted by top economists, found negligible improvements in financial and health metrics among participants whose debt was forgiven. 

The Burden of Medical Debt in the US 
In the United States, 40% of adults carry medical debt, a phenomenon unique among wealthy nations due to the lack of universal health coverage and high healthcare costs. Medical debt forces individuals to cut back on essential spending, drain savings, and even downsize homes. It’s linked to poorer health outcomes, including higher incidences of cancer and heart disease. 

Efforts to Relieve Medical Debt 
In lieu of comprehensive healthcare reform, some activists and local governments have launched medical debt relief programs. These initiatives purchase and forgive medical debt for financially struggling individuals. However, the study questions the effectiveness of such programs. 

Surprising Study Findings 
The study analyzed 83,400 individuals who had $169 million in medical debt forgiven by RIP Medical Debt. Results showed minimal improvement in credit scores and financial well-being. Notably, some participants even reported increased depression after their debt was canceled. 

Potential Explanations 
One reason for the lack of significant improvement is that participants often had other substantial debts beyond medical bills. The average debt relief was $2,167, but participants typically had $28,000 in total debt. Thus, erasing medical debt alone was insufficient to alleviate overall financial distress. 

Mental Health Implications 
The study also found that debt forgiveness did not significantly improve mental health. Measures of depression, stress, and anxiety remained largely unchanged. In fact, those with the most medical debt experienced a notable increase in depression. 

The Timing of Relief 
The timing of debt relief may be a factor. By the time the debt was forgiven, the prolonged stress of carrying the debt might have already caused lasting mental health damage. Additionally, the method of notifying participants about their debt relief (via phone call or letter) impacted their mental health, with direct calls leading to worse outcomes. 

Rethinking Debt Relief 
The disappointing results suggest that addressing medical debt after it has accumulated may not be as effective as preventing it in the first place. Researchers and experts agree that more robust health coverage and preventive measures would likely yield better financial and health outcomes. 

Preventing Medical Debt 
Preventing medical debt would involve systemic changes, such as expanding Medicaid, offering more generous insurance benefits, and providing universal health coverage. Past studies, like the Oregon Health Insurance Experiment, support this approach, showing significant reductions in depression and financial strain among those with Medicaid. 

Future Policy Directions 
Experts suggest that policymakers should focus on making hospital financial assistance programs more accessible and transparent. Ensuring that patients are aware of and can easily apply for aid could significantly reduce their financial burden. 

While the study highlights the limited effectiveness of post-accumulation debt relief, it underscores the importance of addressing the root causes of medical debt. Comprehensive healthcare reform remains a long-term goal, but immediate steps can be taken to improve patient outcomes by enhancing access to financial assistance and preventive healthcare coverage. 

Find & Flag Hidden Errors in Your Medical Bills with HealthLock.  
Over half of medical bills contain errors. HealthLock automatically analyzes your and your family’s claims for fraud and overbilling—and can help get your money back. To date, HealthLock has helped members save over $130 Million. Learn more and join now here: www.healthlock.com    


Read the full report and more insights at Vox