May 9th, 2026

By David Fine

I have worked for the past 4 ½ years as a paralegal for a debt collection law firm in Toledo, Ohio that specializes in recovering medical debt for hospitals and doctors. Our law firm sues for medical debt in Ohio, Michigan, Kentucky, Illinois, and Indiana, and sends out letters trying to collect medical debt, in cases where we are not suing, nationwide. Individuals' medical debt ranges from as low as $400 to as high as over $25,000, though in the vast majority of cases of medical debt that we collect the amount owed is roughly between $400 and $2500. This likely means many cases of medical debt arise when insurance pays most of the cost of health care, but people cannot afford to pay their deductibles, co-pays, coinsurance, or other out-of-pocket costs.

After being sued a small percentage of debtors with financial resources or credit cards with large limits pay their debt off in full. Others call us to set up a payment plan. Those who do not do either, we try to garnish the debtor's wages from their job, which amounts to 25 percent of their take-home pay. Our law office has limited success in this, with the vast majority of debtors having left the job that we have on file. In Michigan we can also garnish the debtor's state income tax refund, which in a relatively small percentage of cases yields between $200 to $3,000 in tax refund monies.

Medical Debt is a crisis in the United States. Millions of Americans struggle with medical debt, it hampers their ability to provide for themselves and their families, and people report cutting spending on food, clothing, and other household items because of it. Some people with medical debt are currently suffering from a chronic illness that requires that they continue to receive even more health care.

According to a review of medical debt published in Health Affairs Scholar, "In 2024, 36% of U.S. households had medical debt, 21% had a past-due medical bill, and 23% were paying a medical bill over time to a provider."

The authors estimate that "medical debt worth $194 billion was in active collection." Many people burdened by medical debt end up filing for bankruptcy, and according to one study, published in the American Journal of Public Health, there are an estimated 530,000 medical bankruptcies annually.

Medical debt is also especially a burden for those people struggling with health issues. According to KFF, 20% of people in poor health reported having medical debt, and 14% of people in fair health reported having medical debt. 13% of people living with a disability report having medical debt.

America's crisis of medical debt largely arises out of the problem of people obtaining health insurance that underinsures them, leaving individuals with significant deductibles, co-insurance, or out-of-pocket expenses that they cannot afford to pay. Health insurance with a $0 deductible is outrageously expensive - On the Affordable Care Act marketplace, a United Health Care individual plan with no deductible and an out-of-pocket maximum of $7,700 costs $1,366.72 per month, ($660.72 per month after a government subsidy available to someone earning $30,000/year), a health insurance cost which is completely unaffordable for most people. Even with this most-expensive, zero-deductible health insurance, a person who experienced a serious injury or severe illness or disease could end up still owing the out of-pocket maximum of $7,700 to the hospital and doctors.

Most people, however, can only afford a health insurance plan with a significant deductible. According to KFF, typical health insurance deductibles in Affordable Care Act health insurance plans averaged about $2,912 in 2026, with some as high as $7,476. Average deductibles for employer-provided health insurance are similar.

With the enactment of the Affordable Care Act (ACA) health insurance program in 2010, many more Americans have been able to purchase health insurance. According to KFF, in 2023, about 48.6% of Americans had their health insurance through an employer-based plan, about 21.2% had Medicaid health insurance, 15% had their health insurance through Medicare, and 6% obtained their health insurance through the ACA Marketplace or privately. 1% of Americans have health coverage through the military or the Veterans Administration health care programs.

However, since Congress and the President's passage of the One Big Beautiful Bill Act in 2025, which instituted work requirements for Medicaid and cut its funding, and which allowed the extra ACA subsidies to expire (and with skyrocketing health insurance costs on the ACA marketplace ), there will be a reduction in the number of Americans who have health insurance. In 2023, according to KFF, 25.3 million Americans 64 years old and younger did not have health insurance, 9.5% of the population. While still a significant number of uninsured, that number is a considerable improvement from 2010 when 17.8% of Americans were uninsured.

According to KFF, 59% of uninsured Americans report having problems paying for health care and 75% say they skipped or postponed getting needed health care due to cost.

States, Counties, and Cities Step In to Alleviate Medical Debt

According to USA Today, A large number of cities, counties, and states, including New York City, Cook County Illinois (which includes Chicago), Connecticut, Michigan, New Jersey, Arizona, North Carolina, and more, acknowledging the medical debt crisis, have stepped up to relieve hundreds of thousands or even millions of individuals' medical debt, often using American Rescue Plan Act monies to do so.

The City of Toledo, Ohio is one of those cities, partnering with the nonprofit Undue Medical Debt to purchase medical debt from health care providers, so far paying $230 million to relieve 112,000 local patients in the Bon Secours Mercy Health and ProMedica Health systems of their medical debt.

The City of Toledo obtained $800,000 of that money from American Rescue Plan Act funding from the federal government. Lucas County Commissioners also allocated $800,000.

Undue Medical Debt accepts donations at its website and claims to have relieved over $25 billion worth of medical debt. However, you cannot apply for the relief, Undue Medical Debt has its own method of choosing who receives the relief.

Medical debt causes considerable financial hardship for millions of Americans who may already be just getting by financially and skyrocketing health care and insurance costs are causing people to skip or postpone health care and avoid purchasing prescription medications. Part of our society's recent method of dealing with medical debt - having states or localities pay for it, often using federal money to do so - is like putting many band-aids on a gaping wound, with many people still suffering from the burden of medical debt and others just going bankrupt. While it is compassionate of these cities, counties, and states to pay off people's medical debt, this is not a proper solution to a dysfunctional health insurance and health care system.

America's crisis of medical debt is a symptom of America's dysfunctional health insurance and health care system. Our health insurance system harbors many for-profit health insurance companies like United Health Group and pharmaceutical companies that are raising prices and earning billions of dollars per year in profits and passing much of those earnings on as substantial dividends to their stockholders, while their stock prices are through the roof.

U.S. spending on health care is also through the roof compared to other wealthy nations, with the U.S. spending $14,775 per capita in 2024 compared to $9,365 for Germany, $7.469 for Australia, and $5,790 for Japan.

To solve America's Medical Debt crisis, the U.S. also needs to solve the problem of our excessively high medical costs. A solution to America's medical debt crisis would be for America to offer its citizens much more affordable health insurance that would cover the vast majority, and in some cases the entirety, of the costs of all health care. Congress and the President could do this by mandating affordable zero-deductible health insurance plans that strictly limit out-of-pocket maximums, and by increasing government subsidies and tax credits for health insurance, or they could abandon the partial private and for-profit health insurance system altogether and embrace a national health insurance program like Medicare for All. Until then, millions of Americans will still be grappling with medical debt, as well as being sued by debt collectors like myself to recoup those monies owed to hospitals and doctors.

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