Medical Debt Hits the Heart of the Middle Class

Millions of Americans have medical debt, but who has that debt might surprise you. High medical costs and debt affect low-income families, but the heart of the middle class–those with incomes between $50,000 and $100,000–sees the highest rates of medical debt. This holds across all demographics—race, ethnicity, education level, age, parental status, health insurance status, and geography according to the Census’s Survey of Income and Program Participation (SIPP). In this report, we define the heart of the middle class as families with an income of between 200% and 400% of the federal poverty level, which is between approximately $50,000 and $100,000 for a typical family of three in 2023.¹ This report builds on Third Way’s work to end medical debt.

Below, we explore the sheer size of the middle-class medical debt problem. We found:

1. The heart of the middle class has the highest rate of medical debt.
2. Black and Hispanic middle class have the highest rates of medical debt.
3. The heart of the middle class has the highest medical debt problem across all education levels.
4. The middle-class debt problem dominates most age groups.
5. Middle class with and without children have the highest debt rates.
6. Medical debt is higher for middle-class families regardless of health insurance.
7. The heart of the middle class has a medical debt problem across the country.

1. The heart of the middle class has the highest rate of medical debt.

Nearly 17 million middle-class families (23.5%) had medical bills that they were unable to pay in full in 2020. That’s 1.5 points higher than lower-income families and 9 points higher than higher-income families. The heart of the middle class comprises the plurality (37%) of people with medical debt in the United States.

Families in the heart of the middle class are more likely to have medical debt than lower-income families despite having higher rates of good insurance coverage. Lower-income families often do not seek care at all because of the cost. When they do, they may quality for additional assistance outside of coverage like payments tied to income levels at public health clinics and debt relief at some hospitals. Middle-income families are also less likely than higher-income families to have the disposable income to pay high deductibles and other out-of-pocket costs.

2. Black and Hispanic middle class have the highest rates of medical debt.

Across racial and ethnic groups, the heart of the middle class consistently sees higher rates of medical debt. And across the middle class, racial disparities persist, with Black and Hispanic families seeing the highest rates.

• 4 million (37.5%) Black middle-class people have medical debt, 8.5 points higher than Black low-income people and 16 points higher than Black high-income people.
• 6 million (25.2%) Hispanic middle-class people have medical debt, 5 points higher than Hispanic low-income people and 7 points higher than Hispanic high-income people.
• 8 million (20.4%) white middle-class people have medical debt, 1 point lower than white low-income people and 9 points higher than white high-income people.
• 580,000 (16.6%) Asian middle-class people have medical debt, 7 points higher than Asian low-income people and 8.4 points higher than high-income people.

3. The heart of the middle class has the highest medical debt problem across all education levels.

Medical debt hits the heart of the middle class the hardest, regardless of whether they went to college or not. In every education category, more middle-class families have medical debt than low- and high-income families.

• 2 million (27.1%) middle-class people who didn’t finish high school have medical debt, 6 points higher than low-income people and 5 points higher than high-income people with the same education level.
• 1 million (26%) middle-class high school diploma holders have medical debt, 2.4 points higher than low-income high school diploma holders and 7.4 points higher than high-income high school diploma holders.
• 7 million (25.5%) middle-class people with some college experience have medical debt, 2 points higher than low-income people and 9.3 points higher than high-income people with the same education level.
• 3 million (16.5%) middle-class Bachelor’s degree holders have medical debt, similar to low-income Bachelor’s degree holders and 8.1 points higher than high-income Bachelor’s degree holders.

It is important to note that those with less education still see higher rates of debt compared to those with more education. Middle-class Bachelor’s degree holders see the lowest rates of medical debt–more than 9 points lower than those who finished high school and 10 points lower than those who didn’t finish high school.

4. The middle-class debt problem dominates most age groups.

Stratified by age, the heart of the middle class has the highest rate of medical debt in all age groups except for people 65 and older. The differences are most stark for those under 35.

• 4 million (27.4%) middle-class people under 35 have medical debt, 3.4 points higher than low-income people under 35 and 12 points higher than high-income people under 35.
• 3 million (25.9%) middle-class people aged 36-50 have medical debt, 2.7 points higher than low-income people and 12.8 points higher than high-income people of the same age.
• 7 million (26%) middle-class people aged 51-64 have medical debt, 1.9 points higher than low-income people and 11.6 points higher than high-income people of the same age.
• 6 million (14.4%) middle-class people 65+ have medical debt, 1.5 points lower than low-income people 65+ and 7.1 points more than high-income people 65+.

People 65 and older saw the lowest rates of medical debt due to their Medicare coverage. Aging brings higher medical costs, but universal coverage for older people lowers their costs and rates of debt.  

5. Middle class with and without children have the highest debt rates.

Regardless of parental status, middle-class families are more likely to have medical debt, though those with children do see higher rates of debt.

• 6 million (22.6%) middle-class people without children have medical debt, 1.2 points higher than low-income people without children and 9.9 points higher than high-income people without children.
• 3 million (28.7%) middle-class people with children have medical debt, 4.1 points higher than low-income people with children and 15 points higher than high-income people with children.

The more than 4-point gap between lower-income and middle-class families with children is significant. Middle-class families don’t qualify for government programs like the Children’s Health Insurance Program (CHIP) and Medicaid and are left with high medical costs for them and their children.

6. Medical debt is higher for middle-class families regardless of health insurance.

Middle-class families without health insurance see the highest rates of medical debt, but middle-class families with health insurance also struggle with medical debt.

• 7 million (31%) middle-class people without health insurance have medical debt, 3.3 points higher than low-income people without health insurance and 7.1 points higher than high-income people without health insurance.
• 2 million (22.5%) middle-class people with health insurance have medical debt, 1.7 points higher than low-income with health insurance and 10.2 points higher than high-income people with health insurance.

7. The heart of the middle class has a medical debt problem across the country.

The heart of the middle class is struggling with medical debt across all regions of the United States.

• 4 million (24.6%) middle-class people living in the Midwest have medical debt, 0.2 points lower than low-income people and 11.1 points higher than high-income people in the same region.
• 2 million (18.8%) middle-class people living in the Northeast have medical debt, 0.9 points higher than low-income people and 6.4 points higher than high-income people in the same region.
• 8 million (28.1%) middle-class people living in the South have medical debt, 2 points higher than low-income people and 13.5 points higher than high-income people in the South.
• 9 million (17.8%) middle-class people living in the West have medical debt, 3.6 points higher than low-income people and 7.4 points higher than high-income people in the West.

Conclusion

Medical debt can affect anyone, but the heart of the middle class sees unexpectedly high rates of medical debt. But it doesn’t have to be this way. Our plan to end medical debt would prevent it from happening again. It starts with abolishing debt for patients with adequate coverage. This requirement to have insurance is key to ensure medical debt doesn’t continue to harm families and would encourage more people to sign up for coverage. Next, we would refinance bad debt with a provider tax. The cost of refinancing bad debt would be pennies on the dollar, and this tax would ensure the cost is paid for. And, finally, we would make adequate coverage fully affordable.

More than 100 million Americans have medical debt, making it harder for families to pay for groceries, rent, educational costs, and even future medical care. Let’s end it for good.

Methodology

This study used the Census’s Survey of Income and Program Participation (SIPP), which defined medical debt as medical bills that people could not pay in full. It counted individuals as having medical debt if they were part of a household with any member having medical debt, as the onus of paying that debt usually falls upon the whole household and not just the debt holder. This categorization accounts for debt holders of any age, though the subsequent demographic analysis only considers adults aged 18 and above. If two parents did not have medical debt, but their child under the age of 18 did, that household would be considered as having medical debt. The parents would be included in the medical debt population detailed in our analysis.

We ranked households based on the ratio of their total income to their federal poverty threshold. This threshold is unique to each household and depends on the number of people, their ages, and geography. Inspired by Peterson-KFF’s work, we defined lower income as below 200% of the poverty line, middle income as below 400%, and higher income as 400% and above. Having categorized and ranked the households, the individuals within them were then categorized according to their demographics (age, education, race, etc.). We used the 2020 SIPP panels, which has 12.6 million people with medical debt in the lower-income group, 16.9 million people in the middle-income group, and 15.9 million in the higher-income group for a total of 45.4 million. In contrast, the Kaiser Family Foundation Health Care Debt Survey counted 100 million people with medical debt by using a more comprehensive set of questions.