Medical debt is a big problem, and it’s poised to get worse

Millions of Americans are in debt due to medical bills, and a new report sheds light on the severity of the problem.

More than a quarter of U.S. adults (27%) say they owe medical debt or a family member is in debt due to medical bills, according to a report from the Urban Institute in cooperation with the Robert Wood Johnson Foundation.

While those without insurance are more likely to have medical debt, it’s hardly a guarantee. The report said 26% of adults with health insurance had medical debt, compared to 35% of adults without coverage.

But with looming Medicaid cuts, new changes in Medicaid eligibility, and millions of Americans projected to lose coverage, it’s certainly conceivable that more Americans will find themselves struggling with medical debt, says Michael Karpman, principal research associate at the Urban Institute.

Karpman says a driving reason behind the Urban Institute’s analysis was to “establish a baseline for the prevalence of medical debt before these major changes in Medicaid and marketplace coverage begin taking effect over the next several years.”

“So it's something that we plan to monitor over time,” he says.

More without insurance

More people could end up with medical debt in the wake of the expiration of tax credits supporting the Affordable Care Act, leading to big spikes in premiums. About 2.6 million fewer Americans have coverage under the Affordable Care Act this year, according to an Associated Press analysis.

The Urban Institute study focused on December 2025 data from a survey of more than 10,000 adults, so it’s too soon to tell if the end of Affordable Care Act tax credits led to an increase in medical debt.

But Karpman says it’s certainly possible

“That could be a factor in both increasing the number of people who are uninsured and increasing the number of people with medical debt, if those people don't have other alternative sources of coverage,” he says.

Medicaid programs are expected to see $1 trillion less than projected over the next decade as part of the HR 1 tax and spending package approved last year. Some of the bigger cuts in Medicaid programs aren’t projected for a few years.

But starting in January 2027, many Americans will have to show they are working 80 hours per month or are enrolled in educational programs to maintain Medicaid coverage. In addition, Medicaid recipients will have to verify their eligibility twice a year starting in January. Medicaid beneficiaries have only had to demonstrate eligibility once a year in the past, and some analysts project that some could lose coverage.

The Urban Institute has projected between 3 million and 7 million could lose Medicaid coverage due to new work requirements, while 2 million to 3.1 million will lose coverage due to their eligibility being checked more frequently, the report states.

“With more frequent eligibility checks, there are going to be some people who are just no longer eligible based on their income or other circumstances, but also because of procedural disenrollment, where people have some kind of paperwork difficulty and lose coverage because of that,” Chapman says.

Seniors with medical debt

Even without looking ahead, the data shows many Americans are dealing with significant debt from healthcare expenses.

Of those reporting some type of medical debt, more than half (54%) said their families’ debt reached at least $1,000, and 16% of those with a medical debt owed $5,000 or more.

“It's notable how widespread medical debt is,” Karpman says, adding, “I think it's very troubling to see how many people are struggling to pay their medical bills.”

Plus, 18% of adults 65 and older said they or a loved one had medical debt. Since Americans in that group have health coverage through Medicare, that underscores the fact that even those with coverage are having trouble paying healthcare bills.

“Over one quarter of adults with health insurance reported medical debt, which could be related to high deductibles or other cost-sharing responsibilities,” Karpman says. “It could be related to seeing providers who are not in their networks, services that are not covered by their plans.”

What hospitals can do

With changes coming to Medicaid programs and more Americans expected to lose insurance, hospitals and health systems are going to have to help patients avoid getting saddled with heavy debt due to medical bills. A majority of Americans with medical debt (52%) owe money to hospitals and health systems, according to the study.

“There's a role for hospitals and other healthcare providers to help people navigate the more complex application and enrollment processes for Medicaid and marketplace coverage,” Chapman says.

“A lot of providers offer some enrollment assistance, but the enrollment process is going to become a lot more complicated with the shift to more frequent eligibility redeterminations in Medicaid, as well as the work requirements,” he adds. “And so hospitals and other providers are going to have to adapt to that to keep as many people covered as possible.”

Karpman also points out some states have been working with hospitals and health systems to streamline access to financial assistance programs and simplify the application process for aid.

Some states are also setting minimum standards for charity care and limiting actions providers can take to collect payment, such as restricting or eliminating providers’ ability to see wage garnishment, he says.

“There are a number of ways that providers can both work with patients to prevent medical debt to the extent possible, and also potentially limit some of the worst consequences,” Karpman says.