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Unlike Medical Spending, Medical Bills In Collections Decrease With Patients' Age
Michael Batty1, Christa Gibbs2, Benedic Ippolito3
1Michael Batty is an economist at the Federal Reserve Board, in Washington, D.C.
Insights
Medical debt collections decrease with age, despite insurance coverage. Even modest medical debt can lead to collections, impacting household finances across age groups.
Area of Science:
- Health Policy
- Medical Economics
- Consumer Finance
Background:
- Health policies aim to protect patient financial security.
- The impact of medical debt on household finances is not well understood.
- Medical debt is a significant financial burden for many individuals.
Purpose of the Study:
- To examine the age distribution of individuals with medical bills sent to collections.
- To understand the relationship between age, medical debt, and insurance coverage.
- To inform policies addressing medical debt and insurance regulation.
Main Methods:
- Utilized credit report data from over four million Americans.
- Analyzed data from medical bills sent to US collections agencies in 2016.
- Examined the age profile of individuals with medical collections.
Main Results:
- Medical collections significantly decreased with advancing age.
- Average medical debt size reduced by nearly 40% for individuals aged 27-64.
- Medical collection frequency showed less correlation with insurance coverage rates, as many debts were below $600.
Conclusions:
- Medical debt and collections disproportionately affect younger populations.
- Even relatively small medical debts can result in collections, impacting financial security.
- Findings suggest potential policy interventions, including restrictions on age rating in insurance.
Abstract:
Health policy is often designed to help protect patients' financial security. However, there is limited understanding of the role medical debt plays in household finances. We used credit report data on more than four million Americans to study the age profile of people whose medical bills were sent to a US collections agency in 2016. We found that, unlike health care use and spending, medical collections decreased substantially with age. The average size of medical debt decreased nearly 40 percent from patients age twenty-seven to sixty-four, with increases in health insurance coverage and incomes likely playing important mediating roles. However, the frequency of medical collections-that is, the proportion of people with a collection by age-was less closely tied to insurance coverage rates. A potential explanation is that most medical collections were relatively modest in size, with more than half of them less than $600 annually. As a result, medical collections could still occur under typical insurance plans. We discuss how these results could inform policies targeting medical debt and insurance regulation, such as restrictions on age rating.