These Americans suffer from the most overdue medical debt

Getting sick in America can lead to complications aside from health issues: Unpaid medical bills remain a serious issue for millions of adults. 

Almost one out of four working-age adults said they had past-due medical debt in 2015, according to a new study from the Urban Institute. While that may seem shocking, it’s actually an improvement from 2012, when almost 30 percent said they were in that situation. 

The sharp decline could be due to a number of issues, including the rollout of the Affordable Care Act and the continuing economic recovery in the post-recession years. Yet while health insurance can lower the likelihood of ending up in arrears, it isn’t a cure-all, especially given the rise of high-deductible insurance, which can sock people with thousands of dollars of expenses.

One out of 5 people surveyed by the Kaiser Family Foundation and The New York Times had problems paying medical bills, for example. 

Not all Americans are experiencing medical debt in the same way, however. The most likely to suffer from overdue medical bills are those in the millennial and Generation X brackets, as well as those earning less than $35,000 per year, the study found. 

“The fact that millennials and Generation X are more likely to have medical debt is consistent with wealth,” said Signe-Mary McKernan, co-director of the Urban Institute’s Opportunity and Ownership initiative. “People under 40 today are stagnating. They are barely breaking even with the wealth their parents had in the 1980s.”

She added, “The expectation is every generation does better than the previous one, but this is no longer the case. As these findings show, this isn’t wealth in the academic sense.” It’s not having a “a soft landing.”

Geographically, residents of Southern states are most likely to suffer from overdue medical bills, the research found. More than 37 percent of Mississippi’s working age adults have unpaid medical debt, the largest share of any state. Arkansas and West Virginia follow, at 36 percent and 33 percent, respectively. 

Financial knowledge is linked with a lower risk of past-due medical debt, yet the researchers found that formal financial education doesn’t seem to reduce the risk. That may seem like a paradox, yet it could be that people are taking classes on financial education after they’ve already accumulated debt or are in financial turmoil. 

On the other hand, financial knowledge may help adults understand the importance of basics such as having a cushion of savings. That would help with a surprise medical bill and make it less likely they’d get into overdue debt. 

“Think about the things that people and states can do, and that’s making sure that Americans have health insurance coverage and that financial knowledge can help,” McKernan said. “Even $250 to $750 can help families weather a financial crisis. It’s never too late to get started.”

Here are the 10 states with the highest share of working-age adults with overdue medical debt:

  1. Mississippi (37.4 percent)
  2. Arkansas (36.3 percent)
  3. West Virginia (33 percent)
  4. Indiana (32.5 percent)
  5. South Carolina (32.4 percent)
  6. Kentucky (30.9 percent)
  7. Missouri (30.6 percent)
  8. Oklahoma (30 percent)
  9. Alabama (30 percent)
  10. Georgia (29.2 percent)