How many Americans have medical debt? | Opinion

The U.S. has a convoluted, confusing and complicated health care system. For-profit and not-for-profit organizations frequently compete with each other and while large profits and fortunes are made, many patients are seriously burdened with poor access and massive debt.

Health insurance no longer achieves the intended policy benefit of financial security. According to KFF, formerly the Kaiser Family Foundation, the annual cost of health insurance for a family is now almost $24,000, rising 47% since 2013. On average, employers pay 71% of this cost while workers pay 29%. (Employees at smaller firms pay up to 38% of the premium.) On top of this, almost all employees (90%) have deductibles and coinsurance to pay.

In 2022, NPR investigated medical debt in the U.S. and found that the combined high cost of premiums, deductibles, coinsurance and copays has led to 100 million people in the U.S. having medical debt. While hospitals and insurance companies are more profitable than ever, more than half of U.S. adults have gone into debt to pay their medical bills. Today, medical debt is the most common debt on credit records and in collections. This has led to about two-thirds of adults putting off care because of costs and has caused many to declare bankruptcy. In Utah, 12.9% of the population, or about 450,000 people, have medical debt in collections.

A major factor contributing to the high cost of health care is the regional dominance of small numbers of health care organizations; such market power allows medical corporations to charge higher prices, reap higher profits, pay higher executive salaries and drive consumer debt. A summary of this research across the past two decades published by Forbes suggests that “de facto monopolies” exist in almost every health care sector today. In the U.S., 10 health care systems own one-sixth of all hospitals and combine for over $226 billion in revenues. Concentrated markets with dominant health care providers lead to higher prices without improvements in quality.

We Utahns are living in a very concentrated health care market. There are only a small number of hospitals, doctors and health insurance companies that dominate Utah’s market. Across Utah, four health care systems (Intermountain Health, Holy Cross, Hospital Corporation of America and the University of Utah) control 95% of the admissions and 97% of gross revenues of acute care. And the health insurance market in Utah is similarly concentrated (data aggregated from IRS Form 990 filings).

This market concentration is reflected in the profits these organizations make. For instance, the IRS filings also show that the not-for-profit health care corporation, now known as Intermountain Health, and its affiliates made almost $1.9 billion in excess revenues in 2021, what a for-profit organization would call profits. At the same time, health administrators reaped very high salaries. In 2021, Intermountain Health paid its CEO over $7 million in compensation, and, in addition, had 14 other top executives with salaries exceeding $1 million.

The for-profit hospitals in Utah have also prospered. For instance, Saint Mark’s Hospital has made over $200 million in profits in 2021 and 2022, equating to operating margins in excess of 40%. Even Utah’s beloved Primary Children’s Hospital has enjoyed huge profits, consistently earning over $100 million per year and $167 million in 2022.

As a consumer of health care, researcher into health care delivery, and author of books about health care, I am alarmed and saddened by how broken our health care system has become and feel we need to make dramatic changes to lessen profit incentives and help all patients afford better care. 

I have recently joined the board of directors of Common Sense Health Care For Utah, which is actively exploring methods to lower our costs and increase quality for all. It is possible to lower health care costs by as much as 20%. Of course, such solutions to high health care costs will be vigorously fought by those with vested financial interests. At the end of the day, however, we must ask who should benefit most from our health care system and be willing to make the tough decisions.

Steve Walston has a doctoral degree from the Wharton Business School at the University of Pennsylvania. He has been a professor at Cornell, Indiana, University of Oklahoma and the University of Utah. He is a former hospital executive, health services researcher and author who is a member of the board of directors of Common Sense Health Care for Utah (commonsensehealthcareutah.org).