Medical emergencies can lead to debt and bankruptcy — even for insured Americans

Medical emergencies often trigger significant debt and a measurable rise in bankruptcy risk for U.S. households, including those who have health insurance.

What the new study shows

A recent Health Affairs study of people hospitalized for traumatic injuries (car crashes, falls, etc.) found that within 18 months:

• The share of patients with medical debt in collections rose by 5.2 percentage points, a 24% relative increase versus pre‑injury levels.​

• Average collections debt increased by about 290 dollars, and 10% of those with debt owed at least 4,480 dollars.​

• Bankruptcy filings increased by 3.2 per 1,000 patients, about a 6% relative rise around 15 months after injury.

These patterns appeared even among people who were insured, especially those with private coverage and high deductibles.

Why insured people still end up in debt

Key drivers for insured Americans include:

• High deductibles: Average Marketplace deductibles exceed 5,000 dollars for silver plans and 7,000 dollars for bronze plans in 2026, so patients face large out‑of‑pocket bills before coverage kicks in.​

• Cost sharing and surprise bills: Coinsurance, out‑of‑network charges, and ancillary provider bills stack on top of deductibles.

• Income shocks: Serious illness or injury often means lost work, so families hit lower income precisely when expenses spike.

By contrast, patients on Medicaid or traditional Medicare in the new injury study showed little change in debt or bankruptcy, likely because out‑of‑pocket costs are capped or minimal under those programs.

Scope of medical debt and bankruptcy

Recent national data underscore how widespread the problem is:

• About 20 million adults—nearly 1 in 12—owe medical debt, with total balances of at least 220 billion dollars in 2021.​

• KFF Health News reports around 100 million people in the U.S. are carrying medical or dental bills they cannot fully pay.

• Earlier research tied roughly 40–60% of personal bankruptcies at least partly to medical bills or illness‑related income loss, even after the Affordable Care Act expanded coverage.

One analysis found that more than half of insured adults with private coverage say they could not afford a 6,000 dollar medical bill, illustrating how quickly a single emergency can become unmanageable.​

Policy implications and fault lines

Experts and advocates argue that private insurance is failing in its core function of shielding families from financial catastrophe:

• Underinsurance—coverage with high deductibles or narrow networks—means people are “insured on paper” but still exposed to ruinous bills.

• As enhanced ACA subsidies lapse, more people may move into skimpier plans or lose coverage, potentially worsening post‑injury financial fallout.​

• Stronger protections, like lower or income‑based caps on out‑of‑pocket costs, clearer financial‑assistance rules, and limits on collections and credit‑reporting use of medical debt, are being actively debated at both state and federal levels.

For an individual household, the combination of a sudden health shock, high out‑of‑pocket charges under “normal” insurance, and reduced earnings is exactly the kind of cascade that pushes families into collections and, for a non‑trivial minority, into bankruptcy court.