The report is focused on California, where the institute is located, but draws on national data to outline the problem of medical debt. It found that medical debt is the number-one cause of bankruptcy in the U.S., with 62% of all bankruptcies caused by medical bills. It also noted that a 2015 survey by the Kaiser Family Foundation found that 26% of Americans aged 18 to 24 said they struggled to pay medical bills.

A racial gap in medical debt

The report said medical debt is more common in communities of color. It reported that about a third of Black adults nationwide have past-due medical debt, compared with just under a quarter of White adults.

"Medical debt is both a symptom and a cause of the racial wealth gap," the report said, noting policies that have restricted people of color from having access to financial services, employment, and housing, all of which have contributed to racial wealth disparities—making medical debt more likely among people of color.

"Medical debt exacerbates these racial wealth disparities by limiting individuals' ability to participate in the economy and access wealth-building channels such as homeownership," the report said. "Additionally, medical debt creates conditions of economic insecurity that lead to poor health outcomes and premature death for people of color."

In California, the study said, the pandemic has taken a greater toll in Latino communities. "While we lack data for COVID-19 hospitalizations by race in California, the cost of COVID-19 treatment raises concerns given the disproportionate impact of COVID-19 on California's Latino communities," the report said. "As of February 2021, Latinos accounted for a staggering 55% of coronavirus cases, while making up only 39% of the state's population."

Policy recommendations

The Greenlining Institute report concluded with a list of recommendations for policymakers. These included:

• Expanding comprehensive financial assistance programs (FAPs) for all large, for-profit health care facilities. This would include billing practices for free-standing ambulatory surgical centers, outpatient clinics, and the providers that work in such facilities.
• Ending the practice of transferring debt to third-party debt collection agencies. Instead, the report said, health systems or the state should provide financial assistance programs for low-income patients.
• If debt collection agencies are used, they should be prohibited from reporting medical debt to credit reporting agencies—something that could interrupt the cycle of debt that medical treatment can trigger. The report also calls for mandating public reporting of debt collection practices by health care providers.
• Build more consumer protections into the billing system, for example, screening patients for their eligibility for state aid programs, or requiring systems to inform patients of FAP policies.

"Medical debt threatens the physical, mental and economic well-being of vulnerable communities, and the material consequences of this harm cannot be ignored," the report said. The author concluded that by addressing medical debt, state and federal lawmakers could also address systemic racial barriers to health and wealth.

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