Medical debt has become one of the most pervasive financial burdens facing American households, affecting more than one-third of all families nationwide. A new report by The Kaplan Group examines the national medical debt crisis through comprehensive state-level data, revealing significant geographic disparities and establishing connections between consumer medical debt, and serious payment delinquencies.
Key Takeaways
- 36.3% of US households carry some form of medical debt (national household-level estimate).
- At the state level, the share of adults with medical debt varies from 2.3% of adults in Hawaii to 17.7% in South Dakota, with a national adult average around 8–9%.
- $194-$303 billion in medical debt is currently in active collection nationwide
The Burden of Medical Debt on Americans
Medical debt has emerged as one of the most common forms of credit extended to American households. According to the latest data:
36.3% of US households have medical debt, broken down as follows:
- 21.4% have past-due medical bills
- 22.8% are actively paying off medical bills over time to providers
- 16.8% borrowed money (often via credit cards) and still owe loans to pay medical bills
This represents approximately 47 million households carrying medical debt across the country.
The scale of individual medical debt varies considerably:
- Roughly 8–9% of adults nationwide have medical debt today
- 6% of adults (approximately 14 million people) owe over $1,000 in medical debt
- 1% of adults (approximately 3 million people) owe over $10,000 in medical debt
- The median medical debt among those who owe is estimated at $1,500-$2,000
Collections Activity
Total medical debt in active collection is estimated at roughly $194 billion, with estimates ranging from about $194 billion to roughly $300 billion, depending on data sources and methodology. Notably, medical debt has now overtaken non-medical debt as the largest source of debt in collections.
Only a fraction of medical debt appears on credit reports despite widespread collection activity. Credit bureau changes implemented in 2022 removed:
- All paid medical debts
- Medical collection debts under $500
- Medical debts less than one year old
This means traditional credit-based risk models may significantly underestimate the true financial stress consumers face.
Medical Debt by State
State-level analysis reveals geographic variation in medical debt prevalence, with some states experiencing rates nearly eight times higher than others.
- Highest rate: South Dakota at 17.66%
- Lowest rate: Hawaii at 2.30%
- Mean: 9.18%
- Median: 9.01%
- Range: 15.36 percentage points between highest and lowest states
- Southern and Southeastern states dominate the high medical debt rankings, with 7 of the top 10 states located in this region.
Top 10 States with Highest Medical Debt Rates
- South Dakota — 17.66%
- Mississippi — 15.23%
- North Carolina — 13.41%
- West Virginia — 13.26%
- Georgia — 12.74%
- Vermont — 12.23%
- Tennessee — 12.03%
- Indiana — 11.99%
- Kentucky — 11.97%
- South Carolina — 11.70%
States with Lowest Medical Debt Rates
- Hawaii — 2.30%
- Washington, D.C. — 2.65%
- California 3.89%
- Massachusetts 5.11%
- Rhode Island 5.16%
Debt Delinquency vs. Medical Debt Share
Analysis of 11 states with complete delinquency and medical debt data reveals a clear positive relationship between medical debt prevalence and late-stage consumer distress. In this sample, the correlation between medical debt share and a 90+ composite (90 days late + 120+ days late + derogatory) is about 0.345. That’s a meaningful positive link in the expected direction.
- Texas leads this subset with both the highest medical debt rate (10.72%) and one of the highest 90+ day delinquency rate (2.31%), indicating significant financial stress affecting multiple payment obligations.
- California demonstrates the opposite pattern—the lowest medical debt rate (3.89%) corresponds with the lowest serious delinquency rate (1.76%), suggesting its healthcare coverage policies and consumer protections may reduce cascading financial distress.
- Florida presents an interesting outlier: while its medical debt rate (8.74%) is below the national average, it has the highest derogatory account rate (2.56%), indicating severe long-term collection issues.
Medical debt remains a widespread and unevenly distributed burden across the United States, with state-level prevalence ranging from 2.30% (Hawaii) to 17.66% (South Dakota). This dispersion coincides with broader signs of household credit stress.
For collections and credit risk, the implications are straightforward. Higher medical debt environments are more likely to experience heavier late-stage roll rates and deeper derogatory outcomes, which can spill over into small business payment behavior and default conditions. That makes medical debt prevalence a useful contextual indicator when sizing downstream collection risk and planning portfolio strategies.
Methodology
Data sources and scope
- State medical debt share: KFF.
- Delinquency snapshot (11 states): FRBNY Consumer Credit Panel
Analytical approach
- Computed the 90+ composite per state from the provided buckets.
- Joined the 11-state delinquency panel to the medical debt share table to create a matched set for analysis and visualization.
- Relationship assessment: Computed the Pearson correlation between medical debt share and the 90+ composite in the 11-state matched sample. The observed correlation is ~0.345 (positive and directionally consistent).
- Visuals: Produced a scatter/regression of medical debt share (y-axis) versus 90+ composite (x-axis) to show the slope and dispersion. A complementary ranked table highlights the states with the highest late-stage stress.
- Interpretation: Focused on directional evidence (higher medical debt associated with higher late-stage delinquency), with attention to outliers and counterexamples that indicate the role of policy, insurance coverage, and local credit structure.
