Medical debt seems likely to rise for many Americans next year, with health care and insurance cost increases expected nationwide, alongside an uptick in the number of Americans who will lose access to health insurance due to various Trump administration policies.
“Americans will face even higher medical debt burdens next year,” Neale Mahoney, director of the Stanford Institute for Economic Policy Research (SIEPR) and professor of economics at Stanford University, told Newsweek.
Why It Matters
Medical debt is recognized as money owed to medical service providers such as hospitals or private practices, and can be accrued by both those with and without insurance.
Those with insurance may end up with debt if their deductibles are particularly high, and certain patients, like cancer patients, or those with a disability, can see their medical debt build up over time.
What To Know
Estimates on the prevalence of medical debt in the country vary: a Census Bureau analysis found 15 percent of households owed medical debt in 2021, while the health research organization KFF found that 41 percent of adults had health care debt in 2022 by using a broader definition that included health care debt on credit cards or owed to family members.
The Massachusetts Health Insurance Survey also recently found that one in eight Americans in the state had family medical debt.
While it is hard to pin down the exact number of Americans who have medical debt in the country, there is a lot more clarity in the expectation that the number will go up next year.
What is predicted to be a major contributor to the rise in medical debt in 2026 is the changes being made to the federal program Medicaid and Affordable Care Act (ACA) plans due to certain Trump administration policies.
As part of the ‘One Big Beautiful Bill’, there will be $1 trillion in cuts made to Medicaid, which the Congressional Budget Office (CBO) predicted will see millions pushed off the program, alongside work requirements for eligibility, unless exempt, which many have warned will push even more Americans off the program, largely because of the administrative burden.
The Trump administration has also made no action to renew the former President Barack Obama policy of enhanced tax credits that gave lower-income Americans access to purchase plans in the ACA marketplace, meaning they are set to expire at the end of this year.
As a result, national average increases for ACA plans are forecast to go up around 20 percent, and those working in small businesses, those who are retired and students are likely going to be the most affected.
At the same time, employer health benefit plans are also predicted to see an average increase of over 6 percent in cost next year.
Mahoney said that the cuts to Medicaid and the loss of the ACA enhanced tax credits will “throw up to 15 million people off insurance,” he said which will lead to a rise in deductibles and coinsurance and ultimately “strain those who hang on to insurance coverage.”
“My research shows this medical debt will weigh on family budgets and harm their health, reducing credit scores and making families think twice before filling their medications and going back to the doctor for follow up care,” he said.
In light of this outlook, many Americans are deeply concerned about the rising costs of health care and insurance.
A recent poll by The Associated Press (AP) and NORC at the University of Chicago found that 57 percent of Americans were “extremely” or “very” concerned about rising health care costs.
These upcoming changes also build on other factors driving up the cost of health care, such as inflation, increasing labor costs following the COVID-19 pandemic, and the growing demand for GLP-1 drugs such as Ozempic and Wegovy for diabetes treatment and weight loss.
There are also already signs that many Americans are struggling to cover their health care costs.
According to Politico, financial assistance provided by the charity HealthWell Foundation is already 23 percent higher this year than all of last year, while the Colorectal Cancer Alliance has seen a 26 percent increase in requests year-over-year, and the charity CancerCare has seen a 10 percent increase in year-over-year requests.
Although, Tal Gross, a professor of markets, public policy and law at Boston University, told Newsweek that a recent study “demonstrated that relieving consumers of their medical debt actually has little impact on their lives.”
“The concern I have is not then with the debt itself but how the anticipation of medical debt affects health care consumption,” he said.
What People Are Saying
Gross told Newsweek: “We want Americans to consume health care when they need it. There’s evidence that they will avoid health care if they anticipate that the health care will require large copayments or bills that they cannot pay. That is the main concern here.”
Mahoney told Newsweek: “It’s unconscionable that our country compounds health shocks with crushing medical debt. The best approach is to stop the accumulation of new medical debt at the source by expanding health insurance coverage and reducing deductibles and coinsurance. Hospitals should also do their part by providing financial assistance to families that can’t pay and forgiving unpayable debt.”
What Happens Next
It is likely that more Americans will struggle to cover health care and insurance costs next year, driving up medical debt across the country.
