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Proposed federal spending cuts to health care in Republicans’ “One Big Beautiful Bill Act” may increase some families’ medical debts by as much as $22,800, according to a new report from Third Way, a Washington, D.C.-based think tank.
The Republican budget bill proposes $1.1 trillion in cuts to health care that target both Medicaid and Affordable Care Act coverage. An estimated 16 million people may lose health coverage based on those proposals, the Congressional Budget Office has estimated — 7.8 million who would lose Medicaid and 8.2 million who would lose Affordable Care Act coverage.
Overall, medical debt would increase by $50 billion as a result of the budget bill changes — a 15% rise over today’s $340 billion in unpaid debts, according to Third Way.
‘Medical debt stands in the way of the American Dream’
Health coverage losses would increase the number of people in families with medical debt by 5.4 million, according to Third Way’s report. More than 100 million people currently have medical debt in the U.S., according to KFF.
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An estimated 2.2 million households would have medical debt because of Medicaid coverage losses, while 3.2 million more people would rack up balances due to Affordable Care Act reforms that may prompt coverage losses or higher premiums, according to Third Way.
Without coverage, families may see their medical debts increase by as much as $22,800, according to Third Way’s report. About 87% of households that previously had no medical debt would accumulate an average of $22,800 in balances. Meanwhile, 13% of households may accumulate an additional average of $8,790 in medical debt on top of $13,490 in existing balances.
“That’s going to put people’s dreams back, if they’re hoping to go to college or hoping to have a solid retirement or hoping to buy another house,” said David Kendall, senior fellow for health and fiscal policy at Third Way. “Medical debt stands in the way of the American dream, and we shouldn’t make it worse.”
Health insurance ‘makes a measurable difference’
The White House said proposed federal spending cuts are aimed at eliminating “waste, fraud and abuse” in government programs including Medicaid. The Trump administration has said the “big beautiful” bill is a potential “economic windfall for working and middle-class Americans” through tax cuts, higher wages and higher take-home pay.
In a Monday letter that cites the Third Way report, Sen. Jeff Merkley, D-Ore., ranking member of the Senate Budget Committee, and Democratic Sens. Cory Booker of New Jersey, Chuck Schumer of New York and Ron Wyden of Oregon, urged Republican leaders to reconsider the proposed health-care cuts.
Addressing medical debt is a “national priority” with “bipartisan support,” the senators wrote in a letter to Senate Majority Leader John Thune, R-S.D., and House Speaker Mike Johnson, R-La. Currently, 16 states have moved to either cancel medical debt or eliminate medical debts from credit reports, they wrote.
“Medical debt is a complex problem, but having health insurance coverage makes a measurable difference,” the senators wrote.
They pointed to a 2013 study in The New England Journal of Medicine that found Medicaid coverage reduces medical debt rates by 13.28 percentage points. The study, published ahead of state Medicaid expansion under the ACA, looked at the effects of Oregon’s 2008 Medicaid expansion.
Americans with unpaid medical balances may face “dire” consequences, which may include delaying or going without needed care, cutting back on food or other necessities or taking on additional debt, the lawmakers wrote.
In addition to personal setbacks, medical debt also affects consumer spending, which may prevent economic growth, they said.
“If the Republican reconciliation bill passes these drastic health care cuts into law, working class families across America risk going further into medical debt,” the senators wrote.
“It is not too late to stop these cuts,” they wrote.