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Why Insurance Fails To Protect Americans From Medical Debt

Zero Rss
6 days 13 hours ago
Why Insurance Fails To Protect Americans From Medical Debt

Authored by Sylvia Xu via The Epoch Times,

Having health insurance is no guarantee of avoiding medical debt, according to a recent study.

About one-third of working-age Americans who have health insurance also have outstanding medical bills or debt, according to a Sept. 17 survey conducted by Commonwealth Fund, a private healthcare foundation.

That includes people with an employer-sponsored health plan, an individual health plan, or Obamacare, according to the report.

Hospitals are the main creditors, the survey found. Sixty-four percent of insured people with medical debt said it was from hospital services such as inpatient care, outpatient care, and emergency department care.

Routine care added to the debt for many of the 4,000 survey respondents. That included doctor visits (43 percent), treatment for chronic conditions (39 percent), lab work or diagnostic tests (38 percent), and dental care (25 percent).

Nearly half reported having $2,000 or more in unpaid medical bills.

Most of those having medical debt laid the blame on insurance companies (64 percent) or the broader healthcare system (57 percent), according to the survey.

"When insured people are left owing thousands of dollars for their care, coverage is falling short of its most basic purpose: protecting people financially when they get sick," wrote Sara Collins, coauthor of the report.

Here's why having health insurance often fails to protect Americans from debt.

Coverage Denials

At least one in five adults or their family members experienced coverage denials, either before or after they were provided care from July 22 to Oct. 27, 2025, according to a June study from Commonwealth Fund.

A similar March study from KFF, a healthcare policy research center, found that 33 percent of insured adults had coverage denied between 2022 and 2024.

Common denial reasons include noncovered services, out-of-network providers, failure to seek prior approval, or a determination by the insurer that the treatment is not medically necessary, according to KFF.

Physician billing or administrative errors can also lead to claim denials.

"Minor data errors are the most common culprit for claim denials," said Blue Cross Blue Shield in Texas in a report. That happens when a provider submits the wrong code, leaves information out, or has a patient's name or birthdate wrong.

Among those who reported billing errors or coverage denials, fewer than half challenged them, mostly because they weren't aware they had the right to do so, according to a 2024 Commonwealth Fund survey.

While about one-third of prior authorization denials in the Obamacare system were overturned after appeal, fewer than 1 percent of denied claims are appealed in 2024, according to KFF.

"Not everyone has the time, knowledge, or resources to challenge their insurer's decision," stated Alex Hoagland, assistant professor of health economics at the University of Toronto, in a 2025 Commonwealth Fund study.

Benefit Cuts

About 60 percent of working-age Americans got health coverage through an employer in 2025, according to KFF. That's more than 165 million people.

But the cost to employers has been rising.

For 2027, employers are expected to pay more than $19,000 in healthcare premiums per employee, a nearly double-digit increase for the fourth straight year.

Employers have been scaling back the benefit as a result.

Nearly three-quarters of small employers (73 percent) are considering dropping group coverage benefits in 2027, according to a September survey from eHealth, an insurance agency.

More resilient larger employers may respond by "shifting costs to employees through higher deductibles, coinsurance, or restricted networks," said Dr. Paul Fronstin, director of Health Benefits Research at the Employee Benefit Research Institute, in a January report.

Fewer employers are covering GLP-1s to treat obesity due to high costs, according to an August employer report from Business Group on Health, with coverage dropping from 72 percent in 2025 to 60 percent in 2026.

"That could preserve offer rates but reduce the value of coverage, potentially lowering take-up," Fronstin stated.

"For workers, the impact could be significant, meaning higher out-of-pocket costs, greater reliance on public programs and increased financial insecurity tied to healthcare expenses."

Higher Premiums, Cost Sharing

While employers pay the primary portion of premiums, employees cover about 20 percent, according to the U.S. Bureau of Labor Statistics.

Over the past decade, the contribution has increased more than 30 percent for single coverage (31 percent) and the family coverage average (37 percent). In 2025, workers' annual contribution amounted to $1,440 for single coverage and $6,850 for family coverage, according to KFF.

Beyond premium payments, Americans are responsible for out-of-pocket costs including deductibles, copays, and coinsurance.

More than three-quarters (78 percent) of working-age adults are responsible for at least $1,000 in deductibles for most covered services before the insurer pays anything. Ten years ago, only 62 percent of insured adults had a deductible of $1,000 or more, according to KFF.

Coinsurance kicks in after employees meet deductible limits. Coinsurance payments average 20 percent of the charge for covered services. For hospital admission, that amounts to an average of more than $300 per day.

In addition, most of the working population must pay at least $20 in copays every time they visit a doctor for primary care, according to KFF. Average copays exceeded $300 for hospital admission and $180 for outpatient surgery in 2025.

Most plans have an annual out-of-pocket limit, beyond which the insurance company pays 100 percent of covered charges. The average out-of-pocket limit is $3,000 for 72 percent of workers and $6,000 for 21 percent in 2025, according to KFF.

At least half of adults with employer-sponsored insurance or marketplace coverage said their insurance was fair or poor when it comes to monthly premiums and out-of-pocket costs, according to an April report from KFF.

In 2024, nearly 23 percent of insured Americans reported that their insurers did not protect them from high out-of-pocket or unaffordable healthcare costs, according to the Commonwealth Fund.

The breaking point, beyond which an average American cannot pay their medical bills, is around $4,354, according to JG Wentworth, a financial service company.

Unexpected Medical Expenses

Patients can get a surprising bill when they receive care through out-of-network providers, when hospitals charge facility fees, or due to miscalculated prices.

About one in five adults had major, unexpected medical expenses in 2025, with most of the amount over $1,000, according to the Board of Governors of the Federal Reserve System.

Forty-five percent of insured, working-age adults received an unexpected medical bill in 2024 that they thought should have been free or covered by their insurance, according to the Commonwealth Fund.

"Unexpected medical expenses can push households into medical debt, particularly those with limited savings or unstable income," stated the Commonwealth Fund in the September report.

More than a third of insured non-elderly would be unable to pay a $1,000 bill within a month for an unexpected medical expense, according to the Commonwealth Fund.

An unexpected expense of $500 represented a hardship for nearly half of adults in 2025, according to the Federal Reserve, potentially forcing them to borrow money or sell an asset in order to cover the expense.

"As a primary care physician, one of the most difficult things is seeing a patient who can't afford something they truly need, whether it's important testing, a critical follow-up visit, or necessary treatment. This can have real clinical consequences and be incredibly demoralizing for caregivers," said Commonwealth Fund President Joseph R. Betancourt, M.D., in a statement.

"No patient should have to avoid or delay care or experience anxiety about medical bills and debt. We can and should do better. There are clear steps policymakers, insurers, and hospitals can take to ensure people can get and afford the care they need, when they need it most."

Tyler Durden Thu, 10/01/2026 - 18:25
Tyler Durden

J.J. McCarthy looms — but the Giants are Jameis Winston’s team for now

NY Post
6 days 13 hours ago
There is a word for what is going on right now with the Giants and J.J. McCarthy, as far as getting the young quarterback up to speed as quickly as possible.  “It’s crazy,” offensive coordinator Matt Nagy said Thursday.  Crazy?  “Because you’re basically taking all of OTAs just trying to learn a foundation, which guys...
Paul Schwartz

While Subprime Auto Loans Default, Their Bonds Somehow Keep Performing

Zero Rss
6 days 13 hours ago
While Subprime Auto Loans Default, Their Bonds Somehow Keep Performing

America’s subprime auto market has become a fascinating example of how financial engineering can remain remarkably healthy even while the consumer sitting underneath it is getting progressively sicker, according to Bloomberg.

Bloomberg recently dug through nearly 3 million auto loans originated by Exeter Finance, Santander, Carvana and GM Financial and subsequently stuffed into publicly traded asset backed securities between 2021 and 2023. What emerges from the data is a system built with enough interest, fees and collateral protection that borrowers can fall behind, restructure their loans and eventually lose their cars without necessarily interrupting the stream of cash moving toward lenders and bondholders.

The math helps explain why. Subprime borrowers in these pools paid interest rates averaging roughly 18%, while the securities created from those loans were issued at rates reaching about 6.7%. That enormous gap provides room to absorb defaults, pay expenses and still leave money behind for lenders. On top of that, lenders servicing the loans collect fees month after month, regardless of whether the borrower is comfortably current or barely hanging on.

This is where the incentives become interesting. Exeter was particularly aggressive about keeping troubled loans alive. Bloomberg found that it modified nearly two thirds of the loans in its securitized pools, frequently moving missed payments further down the road by extending the life of the loan. Nearly a quarter were modified at least four times. Santander generally followed the opposite playbook, modifying far fewer loans and moving more quickly to repossess and sell the underlying vehicles.

For borrowers, however, postponing the reckoning often did little more than make it more expensive. One Virginia borrower financed a Chevrolet Silverado for roughly $32,000 at 21.5%. After five modifications and more than $10,500 in payments, the truck was repossessed and the borrower had reduced the principal by less than $50. Roughly one quarter of modified loans Bloomberg examined eventually ended in repossession anyway, while another 15% slipped back into delinquency. Among Exeter borrowers specifically, almost one out of every three modified loans still ended with the vehicle being repossessed.

Jamie Talley’s experience puts a human face on the numbers. She borrowed $12,000 from Exeter at nearly 20% to buy a used Chevrolet Sonic, then fell behind. Exeter modified the loan four times and eventually pushed the repayment schedule out nine months. “They said they can push the loan back and you will be back current,” Talley recalled. But being technically current did not solve the underlying problem. Her car broke down, she borrowed more money for repairs and fell behind again. “They almost keep badgering you until you do it,” she said of the extensions.

Bloomberg writes that Talley’s loan was eventually swept into a $1.2 billion Exeter securitization containing more than 53,000 auto loans. Four years and nearly $13,000 in payments later, she still owed $9,230 on a car that had been worth only $8,500 when she bought it.

That is the remarkable part of this machine. The consumer can be financially exhausted while the security built on top of the consumer continues functioning. High interest rates provide a cushion against losses, servicing fees generate additional revenue, repossessed cars retain resale value and extensions can keep payments flowing through the securitization longer. Together, those protections have allowed subprime auto ABS to remain surprisingly durable even as the borrowers underneath them deteriorate.

And that deterioration is becoming harder to ignore. The share of borrowers in securitized subprime auto deals who were at least 60 days delinquent reached 8% in July, the highest level since 2018. S&P has also raised projected losses on certain Exeter securitizations issued in 2022 to as much as 31%, pointing to elevated delinquencies and extensions. Yet the securities themselves have largely continued to hold together.

That divergence is what makes this worth watching. Loan modifications can change the accounting timeline, but they cannot manufacture household income. Moving missed payments to the end of a loan does not suddenly make the borrower capable of affording the car, and while the debt gets pushed further into the future, the collateral underneath it continues getting older.

Even Talley understood the impossible tradeoff. Losing the car earlier might have saved her thousands of dollars, but she also needed it to work and transport her children. “They got us between a rock and a hard place,” she said.

For the moment, the subprime auto securitization machine continues humming despite worsening consumer stress. The deterioration is already visible at the bottom of the structure, among the people actually making the payments. The question now is how far that pressure can travel upward before the financial machinery built on top of them finally begins to feel it.

Tyler Durden Thu, 10/01/2026 - 18:00
Tyler Durden

Waste Of The Day: IRS Enforcement Delayed

Zero Rss
6 days 14 hours ago
Waste Of The Day: IRS Enforcement Delayed

Authored by Jeremy Portnoy via RealClearInvestigations,

Americans underpaid their taxes by an estimated $696 billion in 2022, according to new data released by the Treasury Inspector General for Tax Administration.

Most of the money came from people and businesses that understated their income. But 9% came from people who didn't file a tax return at all, and efforts to track them down have been slow-moving as the Internal Revenue Services' case log remains backed up.

Key facts: The IRS' backlog of cases increased when its office buildings closed during the Covid-19 pandemic, but the Inflation Reduction Act of 2022 appropriated supplemental funding to help resolve the delays.

However, Congress reduced that funding in 2025, and the Trump administration laid off 28% of the IRS' workforce. As a result, "the IRS no longer has the resources to pursue all delinquent filers," according to the inspector general.

The inspector general found that nearly 39,000 people with incomes of $400,000 or more were notified in early 2024 that they had not filed a tax return. As of December 2025, the IRS had not followed up with almost 34,000 of them. Their unpaid taxes are worth an estimated $15.7 billion.

For another almost 11,000 delinquent tax returns, the IRS placed the case in its enforcement queue, instructing agents to take measures like garnishing wages or bank accounts. As of December 2025, 9,463 of the cases have still not been assigned to an IRS agent and remain in limbo. The unpaid taxes are worth an estimated $2.5 billion.

The IRS is also wasting time and resources on people who paid their taxes honestly. Almost 5,000 people received a notice stating that they did not file a tax return, even though they did.

The inspector general estimates that the number of people who did not file a tax return almost doubled over seven years, from 8.8 million people in 2015 to 14.7 million people in 2022.

Had the IRS successfully collected all $696 billion of unpaid taxes in 2022, federal revenue would have increased by 14% that year.

Background: Some of the unpaid taxes come from federal employees themselves. More than 571,000 current and retired federal employees owed $6.3 billion worth of unpaid taxes as of 2024, including thousands within the IRS.

Summary: As politicians debate tariffs and other sources of government revenue, Congress and the White House should also be finding new ways for the IRS to collect the money it's already owed.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

Tyler Durden Thu, 10/01/2026 - 17:40
Tyler Durden

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