In 2022, 11.2% of Black borrowers in the United States had new medical debt sent to collections. For white borrowers it was 5.9%. The gap has barely moved in six years of data, even as debt relief letters, which are now landing in mailboxes across the country, wipe out balances one state at a time.
The figures come from a study published in May in Health Affairs Scholar by researchers at UC Berkeley and Penn State, who examined the credit reports of about 24 million adults ages 18 to 64 from 2016 to 2022. Black borrowers had the highest rate of new medical debt in collections in every year. In 2016 the numbers were 15.6% for Black borrowers and 8.6% for white borrowers. Both rates fell, and the distance between them stayed.
“I think of medical debt as a consequence of inequity,” said lead author Alexander Adia, a Berkeley doctoral candidate. Insurance did not close the gap: the study found that states that expanded Medicaid had lower debt levels, but Black borrowers were still overrepresented in debts sent to collections.
The reasons are in how Black families are covered and cushioned. The National Consumer Law Center (NCLC), in an Oct. 15 brief, notes that Black workers are far more likely than white workers to lack employer-sponsored insurance, and that in states that did not expand Medicaid, people of color make up 60% of adults in the coverage gap. Black families are also less likely to hold the family wealth that absorbs a surprise bill. When it cannot be absorbed, the bill turns into lower credit scores, drained savings and, the NCLC says, lost housing: nearly half of all foreclosure judgments involve medical debt.
Relief is arriving, and it is real. Undue Medical Debt, a nonprofit, buys debt in bulk at deep discounts, so that, in the words of its CEO Allison Sesso, “one dollar gets rid of $100 of medical debt.” Kentucky spent $2.5 million to cancel debt for 130,000 people, and Arizona put $10 million of unused pandemic money into the same work. Americans still owe an estimated $220 billion in medical debt, and about 41% of adults have unpaid medical bills, according to figures NPR reported last month.
Cancelling debt that already exists does nothing about the bills coming next. UCLA economist Wesley Yin found that cancellation improved people’s access to credit, but that it produced no measurable improvement in their mental health or sense of well-being. The cause, the cost of care, stays untouched.
The NCLC warns that the cause is about to get worse. It says the 2025 reconciliation law will cut roughly $1 trillion from Medicaid and the Children’s Health Insurance Program and could leave 15 million people uninsured. Berneta Haynes, an NCLC senior attorney, said: “Medical debt is a prescription for poor health and financial trouble.”
Black families are first in line for that prescription. Wiping out old balances is worth doing, and the states that fund it should keep going. But a country that cancels debt with one hand while it removes coverage with the other will be sending the next round of letters to the same households. Restoring the Medicaid money is the relief that lasts.
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