WASHINGTON – Medical debt impacts tens of millions of people, and it disproportionately harms communities of color.
A new issue brief, Black Families Likely to See Steep Rise in Medical Debt, looks at how recent legislation will increase medical debt and deepen existing racial disparities. The brief examines a self-reinforcing cycle in which poor health leads to debt and debt leads to poorer health among Black adults.
“Medical debt is a prescription for poor health and financial trouble,” said Berneta Haynes, senior attorney at the National Consumer Law Center (NCLC). ”It limits wealth-building opportunities, destabilizes housing, makes it difficult to make ends meet, and hurts Black families the most.”
Health insurance provides one of the strongest protections against medical debt. But the 2025 Reconciliation Act will cut approximately $1 trillion from Medicaid and the Children’s Health Insurance Program (CHIP). The bill and related provisions will leave approximately 15 million people without health insurance – increasing medical debt nationwide and intensifying racial disparities.
The Affordable Care Act’s Medicaid expansion aimed to reduce health care coverage disparities, but 10 states, predominantly in the South, have not adopted the expansion. Within these non-expansion states, people of color make up 60 percent of adults in the coverage gap. Funding cuts threaten to widen this gap.
Black workers are also far more likely to be employed in jobs without employer-sponsored health insurance than their white counterparts. This makes Black people more reliant on more expensive marketplace insurance and increases the likelihood that they’ll go uninsured and have higher out-of-pocket medical costs.
The legacy of redlining and urban renewal contributed to segregated neighborhoods, which have widened disparities in access to health care, quality of care, and environmental factors that lead predominantly Black communities to experience higher rates of chronic disease, adverse birth outcomes, and a lower life expectancy. As a result, Black people are more likely to incur medical expenses, some too large to manage.
Because Black families are less likely to have generational wealth to absorb unexpected medical expenses, the impacts of these expenses are particularly severe. Medical debt depletes savings, lowers credit scores, and increases reliance on high-cost borrowing, making it more difficult for Black families to ever build wealth. It can even lead to housing loss, ultimately worsening financial insecurity for Black families. Nearly half of all foreclosure judgements involve medical debt.
“Medical debt creates a vicious cycle in Black communities where financial hardships lead to worse health outcomes, and poor health forces Black families to pile on debt,” said Haynes. “Lawmakers must address the longstanding structural inequities in access to housing, employment, health care, and health insurance that make Black families more likely to incur medical debt.”
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