The Burden of Medical Debt and the Impact of Debt Forgiveness

Medical debt is potentially a large burden for many Americans—with 44 million individuals holding an aggregate $75 billion in medical debt. While these nominal amounts are staggering, it is unclear to what extent medical debt harms financial well-being. Medical debt recovery rates are low, suggesting that the pure “balance sheet” cost of medical debt is modest for most individuals. Yet medical debt may harm individuals through lower credit scores, higher interest rates, and reduced access to credit—impairing economic opportunities and perhaps even locking individuals in “debt traps.” Collaborating with RIP Medical Debt, a non-profit that buys and abolishes medical debt, researchers will implement a randomized-control trial to study the impact of medical debt. Medical debt will be forgiven for randomly chosen “treated” individuals, whose financial outcomes will be compared to otherwise similar “control” individuals for whom medical debt will not be forgiven.

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RFP Cycle:
HCDI RFP VIII [August 2017]
United States of America
  • Neale Mahoney
  • Raymond Kluender
  • Francis Wong
  • Full project