Executive Summary

Medical debt is the number one cause of bankruptcy in the United States, with 62% of bankruptcies caused by medical bills. In 2016, one in six Americans had past due medical bills, resulting in $81 billion in debt. In a 2015 survey by the Kaiser Family Foundation, 26% of Americans aged 18 to 64—52 million— said that they struggled to pay medical bills. Medical expenses were the largest factor increasing the number of people in poverty last year.

Medical debt is not distributed equally across communities:

  • Nationally, about a third of Black adults have past-due medical debt, compared to just under a quarter of White adults.
  • In California, 31% of people of color have some type of past-due debt in collections, compared to only 19% of White residents.
  • Twelve percent of people from communities of color in California owe medical debt.

The COVID-19 pandemic threatens to worsen health disparities and the burden of medical debt on communities of color. Health care costs due to COVID-19 have already left people in severe debt, and layoffs due to COVID leave historical numbers of people unemployed and uninsured. Communities of color have been especially devastated by the pandemic, leaving them especially vulnerable.


  • Expand comprehensive financial assistance policies for all large, for-profit health care facilities, including ambulatory surgical centers and outpatient clinics.
  • End the practice of turning over medical debt to third-party collection agencies and prohibit such agencies from reporting medical debt to credit reporting bureaus.
  • Mandate public reporting of debt collection practices by healthcare providers.
  • Center medical debt elimination as a part of the state’s COVID-19 recovery package via measures such as the proposed COVID-19 Medical Debt
  • Collection Relief Act, which would suspend the collection of medical debt retroactively from February 1, 2020 until the “end of the public health emergency” and ban wage garnishment and bank account seizure.
  • Cancel medical debt outright. The government can purchase medical debt from debt collectors and health care providers at discounted rates, aiding consumers while avoiding a financial windfall for debt collectors.
  • Incorporate debt cancellation into California’s larger strategy toward reparations for racial injustice. Closing the racial wealth gap by addressing debt (including medical debt) in California requires a reparations package for the Black community.