Patient debt adds stress to already tenuous US economy

Many people say the American healthcare system is largely broken, or at least facing seemingly intractable problems. But it could get worse, compounded by policies of President Donald Trump’s administration on medical debt and inaction by Congress.

Expiration of tax credits from the Affordable Care Act at 2025’s end restricted who could claim Medicaid assistance. That left those covered by Obamacare increasingly facing difficult choices of sucking up extra expenses — while also covering the basics of life, such as rent and food costs — or even forgoing coverage altogether. All of which compounded an already deep medical debt crisis.

It isn’t just the recently uninsured, either. It’s increasingly people who are opting for relatively cheaper premiums, but who then face much higher deductibles and maximum out-of-pocket costs for any care. Making for a growing volume of the so-called underinsured people.

“The focus on bringing down health insurance costs is driven by the philosophy that, for premium costs to go down, people need to be incentivized to stay healthy,” said Jack Glasker, owner of New Jersey-based brokerage Affordable Health Care Solutions. “We see evidence of this in MAHA (Make America Healthy Again) but, despite the initiative and the potentiality of its long-term effects, benefit health plans are being given more freedom to offload the cost-sharing burden through higher deductibles and MOOPs (maximum out of pocket) to the consumer.”

Together with the decreased subsidies from the ACA, “this is what we see as the leading cause of rising patient medical debt,” Glasker said.

(Washington Examiner illustration; Getty Images)

Enactment of Trump’s signature domestic achievement in his second, nonconsecutive term, the One Big Beautiful Bill Act, may be making the medical debt problem worse. OBBBA, which Trump signed into law on July 4, 2025, significantly reshaped U.S. healthcare by cutting nearly $1 trillion from Medicaid. It also imposed stricter insurance enrollment rules and reduced hospital funding. Critics contend these changes are causing a massive rise in uncompensated care costs, more people losing health insurance, and an increase in medical debt for individuals nationwide.

Under the law’s healthcare provisions, up to one-third of patients may be either holding off on or even canceling medical treatments due to financial stress. Some patients are also avoiding necessary exams, check-ups, and treatments.

“Ideally, no one should have to choose between healthcare and living expenses, but it is an all-too-common occurrence since sweeping OBBBA changes left many on the sidelines,” said Rene Hermes, cofounder and chief operations officer at Chicago-based family medicine clinic Hermes Health.

Republicans praise OBBBA as delivering core conservative promises. They note the law makes tax cuts permanent, expands the child tax credit, and implements tax exemptions on tips, overtime, and auto loan interest. They note these provisions, and others provide direct relief for working-class people.

Political paralysis

While sources universally pointed out that rising healthcare costs, including patient debt, are a core issue for voters, there seems to be little appetite for lawmakers to do much about it, at least for now. This may be particularly true with incumbent Republicans, said Joel White, a GOP health strategist and president of the Council for Affordable Health Coverage.

The solutions are out there, he insists — there are, he says, over 100 active healthcare bills being discussed that could lower costs — but some people in Congress are running scared of the Nov. 3 midterm elections. Democrats are favored to win a House majority and have a fighting shot at gaining control of the Senate, with Trump’s approval ratings falling amid the Iran war, sluggish economy, and other challenges.

The most urgent thing is to “address competition issues,” he said. “But Congress is not there yet.”

Policies such as TrumpRx, where he says prescription drugs can be sold to patients at up to 95% off list price, are a good start, White said. Yet such purchases cannot be used against a patient’s deductible, as TrumpRx is not, strictly speaking, a federal program such as Medicare or Medicaid. Rather, it’s a federal portal that directs consumers to manufacturer-negotiated discounts and coupons on brand-name and generic drugs.

White sees it as another example of a lack of competition in the healthcare market, which is squeezing out the consumer.

“The transparency is great, but we need to change federal rules that are standing in the way of the consumer,” he said.

Meanwhile, as structural problems continue not to get adequately addressed in healthcare, patients are facing a grim future. Certainly, in the shorter-term, anyway, with rising costs and less coverage.

It is an unsustainable situation, argues Seth Cohen, president of Cedar, which helps patients find better solutions for their healthcare finances. He says rising medical debt amid substantially increasing premiums is placing even greater pressure on families and the healthcare sector generally, not to mention the overall economy.

“About half of U.S. adults say they could not cover an unexpected $500 medical bill without going into debt,” he said, citing Kaiser Family Foundation data. “That is not a population built to withstand premiums doubling.”

Will loans help?

There has been a move within the administration to suggest struggling patients set up loans with their health insurance company to help pay off rising debt. But this is, at the very least, a stopgap measure, some sources say. Others are more vocal about that simply being a bad idea.

Given the probability of such loans involving interest, such a move would not likely help patients. Some of whom can already access no- or low-interest medical bill plans in certain states.

The idea of loans is not new, said Seth Cohen at Cedar. How such new loan programs could be structured would be key.

“If interest-bearing loans become the default path, the better option patients already have could quietly get crowded out,” he said. “Low or no interest is the line. On the right side of it, financing is a bridge. On the wrong side, it is one more bill the patient cannot pay.”

Financing is unlikely to help the overall situation, said Yahya Khan, founder of Austin-based medical billing specialist Alliance Medical Revenue Group.

“In my view, financing doesn’t solve the problem; it simply spreads it out and, in some cases, adds interest to an already difficult situation,” he said. “The bigger issue is the growing gap between the cost of care and what insurance actually covers.

Medical debt, of course, affects patients the most, but it also affects healthcare providers, too, he added. When such providers can’t collect patient balances, they may have to cut services, stop certain insurance plans, or even close.

“In the end, medical debt isn’t just a financial burden for patients,” he said. “It can reduce access to care for entire communities.”

So, with patient debt rising, and seemingly little political impetus to really address the deep structural problems in the U.S. healthcare system, the consumer will likely find themselves increasingly in the middle of the power battle between healthcare providers and insurance companies.

HERE ARE THE GROUPS TRUMP HAS DESIGNATED AS TERRORIST ORGANIZATIONS

Whether there are purer market-based solutions or others relying on introducing shorter-term measures to possibly address rising debt, such as the proposed loan system, the patient remains disempowered, whatever their political stripe.

“The system is a war between two Goliaths, the insurers and the providers, who are constantly lobbing rockets at each other,” said Eli Rushbanks, director of policy advocacy at Vancouver, Washington-based Dollar For, a nonprofit organization helping reduce patient bills. “The patients are just trying to live in that city, but they are collateral damage.”

Nick Thomas (https://nickthomas.journoportfolio.com/) is a writer based in the United Kingdom.

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