Injuries cause lasting financial harm, even among insured

People in the United States who are hospitalized for traumatic injuries often face increased medical debt and bankruptcy, new research shows.  

The study, published today in Health Affairs, also exposes a striking imbalance: Public insurance programs like Medicaid appear to effectively protect patients. In contrast, private insurance, which covers most working Americans, leaves many vulnerable to significant and lasting financial consequences. 

"What do we have health insurance for? If your car gets T-boned or you step into the street and get hit by a bus, you shouldn't go bankrupt. But we saw that people who faced a medical emergency they did not choose and could not prevent were often financially devastated,” said Dr. John W. Scott, the paper’s senior author.  

He is a trauma surgeon at Harborview Medical Center and associate professor of surgery at the University of Washington School of Medicine. 

Scott and his colleagues tracked more than 12,000 injured patients who were hospitalized in Michigan in 2019 and 2020. They analyzed the patients' financial situations before and after injury by using data from the state’s trauma registry that had been linked to consumer credit reports with patients’ names and other identification removed 

The researchers compared these patients’ financial starting points with about 25,000 similar individuals from the trauma registry whose traumatic injuries occurred slightly later. This control group helped the researchers distinguish the financial impacts of unplanned hospitalizations and minimize potential conflating effects of broader economic forces. 

Key findings on medical debt and bankruptcy: 

• 18 months after hospitalization, the proportion of patients carrying medical debt in collections had jumped by 24%.  
• 18 months after hospitalization, the average medical debt had increased by $290 per patient, or 76%.  
• 15 months after hospitalization, bankruptcy filings had risen by 6%. 

Traumatic injuries — from car crashes to falls to assaults — are unpredictable and can happen to anyone. These events often require expensive emergency surgery, intensive care and lengthy rehabilitation. Medical bills can soar into the tens of thousands of dollars or more. Because many patients are unable to quickly return to work, their financial strain is compounded. 

Michigan was one of 26 states that expanded Medicaid eligibility in 2014 under the Affordable Care Act, Scott noted, so the vast majority of adults in the study had some form of healthcare coverage. Yet patients’ bottom-line losses were widespread, with noticeably higher burdens among people younger than 65, the uninsured, the privately insured and those with low incomes. 

Private insurance fares poorly compared with Medicare, Medicaid 

In this study, “the hardship experienced by privately insured patients contrasts sharply with the stronger protection provided by Medicare and Medicaid,” the authors wrote.  

Medicare enrollees experienced only small increases in medical debt and no change in bankruptcy. Low-income patients under age 65 who were covered by Medicaid experienced no statistically significant increase in medical debt or bankruptcy after their injury. Meanwhile, patients with private coverage were the only insured group who experienced significant increases in both medical debt and bankruptcy. 

That finding echoed a recent JAMA Surgery study of patients’ perceptions of financial hardship after undergoing surgery: People with private, mostly employer-provided insurance reported a greater increase in financial vulnerability than those with public coverage. 

The problem stems from several factors, including high out-of-pocket deductibles, often exceeding $1,700 to $2,500 annually, and out-of-network charges common in emergency situations. 

“This is a uniquely American problem,” said Scott, who was senior author of the JAMA Surgery paper, as well. “People get injured all over the world, but in other high‑income countries they almost never end up in medical debt or file for bankruptcy because of those injuries.”  

The explicit purpose of insurance, he added, “is to protect policyholders from overwhelming debt and bankruptcy. It’s the same reason people buy any kind of insurance.”  

The researchers received funding from the Agency for Healthcare Research and Quality (K08 HS28672, K08 HS028817). 

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