Breaking Down Medical Debt in 2025: Scope, Strain, and the Rise of Patient Financing

Americans are drowning in medical and dental bills. Anything from a surprise ER visit to a necessary procedure not fully covered by insurance can quickly lead to tens of thousands of dollars’ worth of debt. Behind the cost of care lies a financial fallout that extends far beyond the doctor’s office.

Recent surveys and federal data show the scope of medical debt in the United States, how it affects families’ financial stability, and the ways patients are covering their costs.

The Scale of the Crisis

Medical debt remains one of the most widespread financial burdens in the United States. According to a recent Kaiser Family Foundation (KFF) survey, about 41 percent of adults report carrying some form of medical or dental debt. That figure includes unpaid balances to providers, charges put on credit cards, and money borrowed from friends or family to cover treatment costs.

For many households, these debts are not small or short-term. Census data indicates that nearly 20 million adults owe more than $250 in medical bills. Together, those debts add up to at least $220 billion across the country. Within that group, about six percent owe more than $1,000, and roughly one percent report balances over $10,000. For many families, even a single medical emergency can be enough to create long-lasting financial strain.

Even for people with insurance, out-of-pocket bills are common. The previously mentioned KFF survey found that nearly one in five adults is actively paying off healthcare expenses, while about one in four says their bills are past due or that they are unable to pay at all. Medical debt, in other words, is not limited to those without insurance coverage; it cuts across age groups, income levels, and coverage types.

Financial Strain Beyond the Bill

Medical debt rarely exists in isolation. For many families, the ripple effects extend far beyond the doctor’s office or hospital stay. Additional data from KFF shows 41 percent of adults carrying health-related debt also had to cut back on essentials such as food, clothing, or household items to make payments. Others reported delaying rent, mortgage, or utility bills just to keep up with what they owed.

The Commonwealth Fund has reported that many adults sacrifice long-term stability in order to deal with immediate healthcare costs. In one survey, about 40 percent of respondents said they had to dip into savings, use credit cards, or borrow from relatives to pay off their bills.

These choices can compound over time. Once families begin cutting necessities or borrowing to cover medical costs, the debt becomes a cycle that is difficult to escape. It is not unusual for people to take on new loans or credit just to deal with interest charges or collection penalties from existing bills. In fact, medical bills are a leading factor in bankruptcies, accounting for up to 66.5% of cases, translating to 550,000 filings per year.

Perhaps most troubling is how often debt shapes medical decisions themselves. Surveys show that many Americans skip follow-up appointments, avoid filling prescriptions, or decline recommended procedures because they are still paying off prior care. 

In other words, the cost of treatment today directly affects the ability to seek treatment tomorrow.

How Debt Hurts Credit and Opportunity

The consequences of medical debt are not limited to monthly budgets. For many, unpaid bills follow them into other parts of life through their credit reports. Approximately 42 percent of patients with outstanding hospital bills saw those debts appear on their credit histories, and nearly one-third said their credit scores were directly affected.

Credit damage can have wide-reaching effects. A lower score may limit access to affordable car loans, mortgages, or even rental housing. Employers who check credit reports as part of the hiring process may also view applicants with debt less favorably. In these ways, a single hospital visit can shape a family’s finances in the long term, not just as an isolated incident.

Some recent policy changes have aimed to ease this burden. Credit bureaus now automatically remove medical debts under $500 from consumer reports, a move that has improved scores by an average of 20 points for those affected. 

Still, larger debts remain, and a federal proposal to eliminate all medical collections from credit reporting was recently blocked in court. That rule would have benefited an estimated 15 million Americans by improving their ability to access affordable loans.

Borrowing to Stay Healthy: A Growing Trend

As healthcare costs continue to rise, many Americans are turning to borrowing as a way to pay for treatment. A 2024 Gallup-West Health survey found that about 12 percent of adults, or roughly 31 million people, borrowed money for medical expenses in a single year. Together, those loans added up to $74 billion. Younger adults, women under 50, and families with children were among the groups most likely to rely on credit to cover their care.

More healthcare providers are now offering repayment programs to help patients manage large bills. Hospitals, dental offices, and specialty clinics sometimes work with outside companies that let patients split costs into monthly payments. These arrangements are usually referred to as patient financing, and they help patients receive treatment without wiping out savings or turning to high-interest credit cards.

Patient financing can make urgent care more accessible, but it does not solve the larger issue. Debt from medical bills continues to drive financial instability for millions of households. Even with repayment programs, families often carry the weight of healthcare costs for years. 

Policy & Solutions at the State and Federal Level

At the federal level, efforts have been made to reduce the long-term impact. The Consumer Financial Protection Bureau (CFPB) finalized a rule to stop credit agencies from including medical debt on credit reports and ban lenders from using that information in lending decisions. That rule could have cleared an estimated $49 billion in medical bills from the records of around 15 million Americans and improved their credit scores. But in July 2025, a federal judge struck it down, saying the agency had exceeded its legal authority. 

With the federal path blocked, state governments have stepped in to fill some gaps. A 2025 Commonwealth Fund report shows that 21 states now require hospitals to offer financial assistance, while 27 require them to provide community benefits. Unfortunately, enforcement varies greatly. In only six states are there strict reporting requirements that flag problems like discriminatory billing or failure to meet standards. 

Some states are considering stronger safeguards. Studies in places like Colorado, Maryland, and New Mexico show hospitals have raised their thresholds for free or discounted care and changed billing practices to be less aggressive. However, the benefits are inconsistent, and cases of wage garnishments or home liens still slip through the cracks. 

Meanwhile, local efforts and nonprofit groups provide relief to those deeply impacted. Charities such as Undue Medical Debt partner with cities, counties, and relief funds to erase large swaths of medical debt. Connecticut recently used $6.5 million in federal COVID-19 aid to wipe out $30 million in debt for nearly 23,000 people. Undue has helped eliminate almost $15 billion across the U.S. through similar programs.

Medical Debt Will Remain a National Issue

Medical debt continues to shape the lives of millions of Americans, from household budgets to credit scores and even access to future care. The numbers show the scale of the crisis: hundreds of billions in collective debt, significant effects on family stability, and long-term consequences for housing, education, and employment.

While state policies, nonprofit efforts, and repayment tools such as patient financing are helping some patients manage their bills, these solutions only address pieces of the problem. Relief programs have helped some groups by erasing debt, and financing options can make certain treatments easier to access in the short term. Still, healthcare in the United States often comes with a price that many families cannot manage.

The weight of medical debt is not shared evenly. Lower-income households, communities of color, and younger adults report carrying a larger share of the burden.

Policy changes, new financial products, and nonprofit efforts are beginning to offer some relief. Even so, the numbers suggest that the problem is far from resolved. The data makes clear that medical debt will remain a defining challenge for the healthcare system and the economy in the years ahead.