Unpack the 1980s policy shift behind medical debt growth

In the early 1980s, two federal shifts irrevocably altered America’s medical debt landscape. First, Medicare moved to prospective payments in 1983, capping reimbursements to hospitals by diagnosis, which forced facilities to curb costs wherever possible. Simultaneously, states decelerated Medicaid spending, removing “reasonable cost” guarantees. Health economists at the time predicted these moves would incentivize hospitals to pass expenses back to patients—either through higher out-of-pocket charges or aggressive collections. Indeed, by the end of the decade, private insurers balked at rising premiums, ushering in managed-care and later high-deductible plans. A dozen studies from 1990–2010 demonstrate that each reform corresponded with a 20–40% uptick in charity-care denials, self-pay balances, and medical bankruptcies. This interplay of neoliberal policy and market demands illustrates how well-meaning cost controls for government can produce harsh consequences for the least fortunate.

Begin by drafting a brief timeline of key federal reforms: Medicare’s prospective payment in 1983, Medicaid caps in 1981, and managed-care growth in the 1990s. Next, source data on charity-care rates and medical debt over the same period—plot the inflection points. Finally, interview a seasoned provider to capture first-hand accounts of the shift. Package it in a memo outlining how policy trade-offs in payer financing ended up burdening patients. Share it with colleagues who shape your institution’s donation and billing policies. Try it this week.