Health and Health Care Utilization Effects of Medical Debt Forgiveness

ABSTRACT The U.S. health care system leaves many Americans struggling with medical debt.

Approximately 44 million individuals ? both insured and uninsured ? have medical debt in collections, and aggregate medical debt outstanding is estimated at $75 billion. In surveys, patients report that medical debt leads them to delay or reduce health care utilization.

This reduction in utilization may produce immediate negative health effects as well as longer-run negative health effects as individuals age.

Medical debt may also have direct negative impacts on mental health through the stress of debt and the debt collections process.

Finally, medical debt may compound the financial consequences of adverse health events by wiping out savings, ultimately undermining a healthy and secure transition to retirement.

Despite the widespread concern about medical debt, there is little rigorous evidence examining the health consequences of medical debt and the potential benefits of medical debt forgiveness.

This proposal leverages an already-funded, recently-commenced randomized control trial (RCT) on the effects of medical debt forgiveness on household finances.

For this already-funded, recently-commenced study, our non-profit partner RIP Medical Debt has agreed to purchase and forgive debt for a randomly selected 12,000 individuals (for a total RCT sample size of 24,000 individuals, including individuals in the control group).

For this proposal, we are seeking funding to conduct a survey that measures the health care utilization and health effects of medical debt forgiveness on our RCT sample.

Because debt abolishment is randomized, comparing surveyed outcomes of treatment and control subjects will allow us to estimate the causal impact of medical debt abolishment.

In particular, our survey will measure the effects of medical debt on three sets of outcomes: (i) health care utilization, as measured by medical care visits, prescription drug utilization and adherence, and unmet need for medical care; (ii) mental health, as measured by validated screens for depression and anxiety; and (iii) subjective wellbeing, as measured by self- reported health, subjective experience with medical debt, and forgone consumption.

This study would be the first to provide a direct, causal connection between the rising personal debt associated with U.S. health care and the health outcomes of its recipients.

And the study will seek to identify patient groups that are particularly vulnerable to negative health impacts of medical debt, allowing health care providers and charities to target debt relief so that the out-of-pocket costs for health care do not end up adversely affecting the health of vulnerable patients.