Paying the Price: How Medical Debt Disproportionately Hurts People with Disabilities

Authors: Dr. Brandon G. Wilson and Colin Killick 

We live in a nation of tremendous innovation and wealth and yet our health system continues to prioritize profits over people’s health and economic well-being. Rising health care costs, paired with lackluster protections and oversight, incentivize hospitals and medical debt collectors to trap people in an endless cycle of debt for seeking the essential care they desire and need to be healthy.  

This is especially true for people with disabilities who have unique health care needs and more out-of-pocket spending overall. Data suggests that individuals with disabilities are more than twice as likely to have medical debt compared to people without disabilities. The fear of incurring medical debt for their complex care needs is also one of many factors which can turn Medicaid into a poverty trap for people with disabilities, in which they deliberately restrict their incomes to avoid losing eligibility. And the consequences are not just economic. People with debt not only avoid care, but they face cascading financial crises and ongoing stress that takes a toll on their mental and physical health. 

As advocates for health justice, we are energized to see momentum from the Biden-Harris administration as well as the Consumer Financial Protection Bureau (CFPB) on a community-driven policy agenda that addresses the root causes of the medical debt crisis impacting 4 in 10 adults in the U.S. 

This includes a proposed rule that will prohibit the reporting of all medical debt incurred for medically-necessary services on credit reports, a commonsense policy that has bipartisan support from more than 75 percent of voters. Medical debt is the most common type of consumer debt in collection – impacting over 15 million people, according to a report from the CFPB. 

Championed by CFPB Director Rohit Chopra and Vice President Harris, this proposed rule has the support of dozens of multi-issue organizations, as well as advocates from all parts of the U.S., who have signed petitions, sent letters, and spoken with policymakers urging them to put an end to the punitive nature of medical debt and credit reporting.  

Medical debt on credit reports can harm a person’s financial situation in several ways. It can make it difficult to secure loans or buy and rent homes, often resulting in higher interest rates for borrowing. Unpaid medical debt can also lead to delayed or skipped medical care, resulting in worse health outcomes and more debt from untreated conditions. It can also make it harder to find employment — an additional barrier than individuals with disabilities, who already have an unemployment rate twice that of non-disabled workers, can scarcely afford. 

In some cases, people can even face arrest warrants for not appearing in court for debt-related hearings. Incarcerated individuals may incur medical bills while in prison, and if they can’t pay, these bills are sent to collections, leading to further legal issues. 

The criminalization of medical debt is particularly severe for people with disabilities. They may be more vulnerable to aggressive medical debt collection practices and fraudulent schemes targeting marginalized communities, and they often have limited access to legal resources. Incarceration is also particularly dangerous for individuals with disabilities, given both the dangerous lack of accessibility in prisons and jails and often grossly inadequate prison health systems. The proposed rule acknowledges two fundamental truths about medical debt. First, unlike other forms of debt, medical debt is not predictive of an individual’s creditworthiness, given people do not plan to get sick. Since individuals with disabilities are more likely to have medical debt, any policy which harms those who have medical debt is likely to disproportionately harm individuals with disabilities. Second, it is all too common for medical bills to be riddled with errors, a fault of an overburdened health system, not the individual themselves. 

A majority (53%) of adults with health care debt, and 43 percent of all adults, say they have received a medical or dental bill they thought contained an error. We also often hear the stories of people that hadn’t been given the information needed to apply for other forms of financial assistance, such as charity care, for which they might be eligible. This trend is most evident at some non-profit hospitals, that are falling short on delivering the community benefits required under their tax-exempt status. Since medical bills and hospital paperwork are often difficult to parse even for people without disabilities, those with intellectual and developmental disabilities are likely to be less able to identify errors and navigate the bureaucracies required to access charity care.  

Additionally, there is a growing body of evidence showing that the high interest rates and retroactive interest charges on deferred interest cards are worsening the impact of medical and dental debt. These cards are marketed in health care settings – like emergency rooms, hospitals, dental and doctor’s offices – and are most harmful to people with low-incomes whose treatment might otherwise be covered by Medicaid. 

Importantly, it would also prohibit the repossession of medical devices like wheelchairs and prosthetic limbs that people need to live their lives with dignity and respect. We should not allow creditors to impair mobility or other essential functions for people with disabilities, simply because they faced an unexpected medical emergency. Someone’s wheelchair or prosthetic is rightly considered part of their body, and should be no more subject to repossession than a donor organ or implanted medical device.  

This is not an abstract policy debate.  

People are trapped in a debt cycle, unable to live their lives independently, do their jobs, and do the basic activities of daily living brought on by the very health care system tasked with healing them.  

The final adoption of the CFPB rule will provide significant benefits for people with disabilities in several ways. First, people with disabilities tend to use health care services more frequently, resulting in health-related expenses that are 5 to 6 times higher than those of their peers. Additionally, over 25 percent of people with disabilities live in poverty, which is more than double the rate for those without disabilities. This financial instability means that medical debt is far more likely to have catastrophic consequences for them.  

And while the jargon in medical bills is often indiscernible for people, they are often even more inaccessible for people living with a disability. Despite the fact that there are more than 7 million individuals in the U.S. over age 16 with visual disabilities, medical billing information is often not provided in an accessible format or plain language, making it challenging for patients and their caregivers to understand the information they’ve received.  

Beyond the current proposal, we urge the CFPB to go even further to protect medical and dental patients from deferred interest credit cards. By prohibiting the marketing of such products through health care providers or in health care settings, the Biden-Harris administration can put an end to the predatory practice that traps people in a needless cycle of debt.  
 
We also urge the CFPB to prohibit the use of medical debt in employment and tenant screening. No one should be denied a job or housing because of unpaid medical bills. However, about half of employers conduct credit checks when screening potential employees, and 90 percent of landlords use credit checks when screening tenants. This issue is even more pressing during the current housing crisis, which disproportionately affects people with disabilities. They experience higher rates of housing insecurity, higher rates of housing discrimination, and face significant barriers to finding accessible housing.  
 
The medical debt crisis hits harder in states such as Mississippi and Tennessee, where the refusal to expand Medicaid leaves many without coverage. These refusals directly lead to higher out-of-pocket costs, increased rates of medical debt and poorer health outcomes, despite evidence that Medicaid expansion could alleviate these burdens and enhance the well-being of their populations. 

We are at a tipping point.  
 
The U.S. still spends a higher percentage of its GDP on health care than other developed countries, yet we have the lowest life expectancy at birth and the highest death rates for avoidable or treatable conditions. Despite all of the spending on health care, people are getting sicker, poorer and losing faith in the health system overall.  

On one end of the crises, people avoid seeking care for fear of incurring additional debt, which compounds existing health inequities. On the other end, people who do seek care are often left footing a bill they simply cannot pay, leading them to more medical debt and worse health outcomes.  
 
Of course, no good deed goes unpunished. Profit-driven actors within the health care system are likely to use their considerable financial resources to maintain the status quo. Portions of the financial services who benefit from debt collection, lawsuits for medical bills, issuing predatory deferred interest credit cards, and more, will do everything in their power to delay, sway and waylay the agency from finalizing the rule. 
 
The majority of us have a medical debt story, including those of us with health insurance, but the reality is that we are not all impacted the same. The burden is disproportionally felt by Black and Latinx communities, people with low-incomes, as well as people with disabilities. And those with intersectional marginalized backgrounds and identities face an even greater impact of medical debt.  

This is the result of longstanding and systemic barriers to economic opportunity, as well as racism, classism and ableism that is so deeply woven into our culture and society – from political and financial institutions, to health systems and private equity investors, that are steadfast in maintaining the status quo. 
 
Now is the time for policymakers, as well as advocates for health justice, to continue to keep the pressure on. Together, we can end medical debt.  

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Dr. Brandon G. Wilson is the Co-Interim President & CEO of Community Catalyst, a national non-profit organization dedicated to building a health system that is rooted in race equity and health justice, and a world where health is a right for all. He also serves as the Senior Director of Health Innovation, Public Health, and Equity.  

Colin Killick is the Executive Director of the Disability Policy Consortium, a disability rights and advocacy organization. The organization seeks to redefine the role of government as it affects the lives of people with disabilities.