Advocates Push Indiana Legislature To Counter Rising Medical Debt

By Whitney Downard

Roughly one in six Hoosiers have medical debt in collections — higher than the national average — and it jumps to one in four residents for Hoosiers of color.

In all, the Consumer Financial Protection Bureau estimates that Hoosiers have $2.2 billion in outstanding debt. This means Indiana has the eleventh highest share of its population with medical debt in collections across the United States, the highest among its neighbors.

The median amount owed? Just $748.

For several community organizations, those numbers are worrisome.

Hoosiers for Responsible Lending, a coalition of the Indiana Community Action Poverty Institute, Grassroots Maternal and Child Health Initiative and Prosperity Indiana, released the figures in a report analyzing the state’s medical debt and its overall impact on Hoosiers.

“After seven miscarriages, I finally was able to have a child of my own, but it came at a huge cost because of the time she spent in the NICU. Medical bills created so much stress and anguish. They caused me to go through bankruptcy, and eventually I lost my home.” said Deborah Fisher, with Grassroots Maternal and Child Health Initiative, in a release. “I believe we can all work toward solutions so that my daughter, grandchildren, and other families won’t have to face the same challenges.”

Stakeholders compiled the report with the assistance of Americans for Financial Reform, a nonprofit group formed in the wake of the 2008 financial crisis.

The consequences of debt

Having debt in collections creates barriers and families with children under 18 are more likely to have medical debt as well as Black and Hispanic households that may already face hurdles when it comes to credit or housing.

The report notes that people with medical debt have poorer mental health and physical health outcomes, such as depression, anxiety and high blood pressure. Many might delay or skip medical care due to their debt, exacerbating their health conditions.

“Medical debt that goes into collections can exacerbate financial challenges and stress; overdue medical debt that is reported to credit bureaus damages credit scores and makes it more difficult to get loans, insurance, rentals and jobs,” the report said.

Because of the country’s decision not to provide universal health insurance coverage, the United States stands out among its peers for the amount of accrued medical debt and the negative social impact.

States that expanded Medicaid fared better than their peers, with non-expansion states having the highest concentration of medical debt. But underinsured individuals, an estimated one in five adults, had inadequate coverage with high deductibles and co-pays, still risk high medical bills.

“The burden of medical debt is a pervasive challenge for too many Hoosiers,” said Andy Nielsen, with the Indiana Community Action Poverty Institute. “This is unacceptable… Healthcare is a right, and individuals, families, and children should not have to choose between seeking medical care or dealing with crushing debt.”

Analyzing the burden of debt in Hoosier communities

The Indiana Community Action Association issued a survey between 2020 and 2021 to 5,822 Hoosiers who shared information about their debts. Their clients, generally speaking, are at or below 125% of the Federal Poverty Level (though the CARES Act increased that threshold to 200% temporarily).

Nearly half of those respondents, 47.6%, reported outstanding medical debt. Most, or 40%, reported their medical debt balances to be between $1,000 and $10,000 but 17.4% reported having more than that.

The Indiana Community Action Poverty Institute noted that Indiana’s cutoff for Medicaid eligibility is 133% of the Federal Poverty Level ($2,313 monthly for a family of four in 2022), meaning that nearly all of the people surveyed should have been eligible for coverage.

“There is clearly work to be done to ensure that all those who are eligible for Medicaid are enrolled and covered,” the report said.

Look up medical debt in Indiana counties in this interactive map from the Urban Institute: https://apps.urban.org/features/debt-interactive-map/?type=medical&variable=medcoll

Nearly one-third of those Hoosiers surveyed, 30.6%, said they had medical debt in collections. According to the Urban Institute with the U.S. Census Bureau, roughly 16% of all Hoosiers have medical debt in collections, or 25.3% for Hoosiers of color. In Allen County, the disparity was even bigger, with 29.7% of Hoosiers of color reporting medical debt in collections compared to just 11.9% of white Hoosiers. On average, each person with medical debt in collection in Allen County owed $872.

Action on the state level

In December 2021, House Speaker Todd Huston and Senate Pro Tem Rodric Bray sent letters to health insurance companies and healthcare systems urging them to reduce Indiana’s disproportionately high healthcare costs.

Several responded, including the Indiana Hospital Association, promising action to lower the overall cost of care but resisting “heavy-handed government intervention.”

In an April response to those letters, Huston and Bray said they wanted to continue the conversation.

“Our overarching goal is to bring down the cost of health care and deliver real savings for everyday Hoosiers and business owners,” Huston said. “Hoosiers are rightfully frustrated about rising costs and simply can’t afford inaction on reducing healthcare expenses.”

The report from Hoosiers for Responsible Lending outlined several recommendations for reducing debt burdens, including stronger consumer protections, expanding Medicaid enrollment and requiring Indiana hospitals to adopt Financial Assistance Policies.

The report urges lawmakers to draft eligibility standards for financial assistance require all hospitals to provide some financial assistance. According to the National Consumer Law Center, Indiana is one of a few states not to already require those provisions.

“The findings from this report indicate that, among all Midwest states, Indiana has the highest share of its population with a medical debt in collections,” said Jessica Love, the executive director of Prosperity Indiana. “This should be sobering news for any policymaker concerned with long-term economic stability. Indiana’s decision-makers should act quickly to use these findings and implement recommendations to increase consumer protections for all Hoosiers.”

The report acknowledges that the $2.2 billion in delinquent medical debt already held by Hoosiers poses an additional challenge, since private collection companies own that debt. Research on reducing the load is limited but offers potential avenues for further research.

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