| Topic: |
Politics > Politics-USA |
| User: |
"RealityCheck" |
| Date: |
17 Jan 2007 09:14:19 PM |
| Object: |
New Report Links High Credit Card Debt to Medical Expenses |
JANUARY 16, 2007
New Report Links High Credit Card Debt to Medical Expenses
More American Families Charging Co-Pays, Uncovered Prodecures and Health
Care Costs, Putting Them at Financial Risk
NEW YORK - January 16 - As health care costs continue to rise faster than
incomes, families are turning to credit cards to pay for medical care,
according to new research by Demos and the Access Project. The public
policy groups published the findings today in a report entitled "Borrowing
to Stay Healthy: How Credit Card Debt Is Related to Medical Expenses."
Based on data from a national survey of low- and middle-income households
with credit card debt, "Borrowing to Stay Healthy" illustrates that those
who identified medical expenses as a factor in their credit card balances
had much higher credit card debt than those who did not. Americans with
insurance, the report shows, increasingly find themselves paying
unmanageable out-of-pocket expenses for health care--and do not have assets
or income safety nets to cover the extra, often significant costs.
"Too many working people are piling up debt on high interest credit cards,
and risking their financial security, simply because they have the
misfortune of getting sick," said Mark Rukavina, Director of the Access
Project and co-author of the report. "We can't let this happen in America."
Key findings from the report include:
Twenty-nine percent of low- and middle-income households with credit card
debt reported that medical expenses contributed to their current balances.
Within that group, 69 percent had a major medical expense in the previous
three years.
Low- and middle-income medically indebted households had higher levels of
credit card debt than those without medical debt--on average 46 percent
higher. ($11,623 versus $7,964).
Low- and middle-income medically indebted households had higher
debt-to-income ratios than non-medically indebted households.
Among the medically indebted, young adults between the ages of 18 and 34 had
the highest level of average credit card debt ($13,303) of any age group.
Credit card debt levels of medically indebted young adults ($13,303) were
also considerably higher than credit card debt levels for non-medically
indebted young adults (7,450).
The medically indebted are more likely to be called by bill collectors than
the non-medically indebted (62 percent versus 38 percent).
"American families are running out of options and turning to credit cards to
meet necessary medical expenses," said Cindy Zeldin, report co-author and
Federal Affairs Coordinator for the Economic Opportunity Program at Demos,
"Congress should address this new and serious consequence of our nation's
growing health care crisis before more families go into debt, and risk their
financial stability, to get the medical care they need."
"Borrowing to Stay Healthy" outlines reforms addressing several key factors
that will only exacerbate the medical debt crisis in coming years:
1. Differentiate Medical Debt from Consumer Debt. Poor credit ratings can
ruin a family's prospects for homeownership, small business development, and
even employment. National guidelines for identifying and differentiating
medical debt must be developed and enforced.
2. Limit the Entry of Medical Providers into Financial Services.
Provider-sponsored credit cards and revolving lines of credit are often
offered under the guise of financial assistance--frequently with the same
rates and fees of consumer credit. Patients may feel compelled or pressured
to access these services as up-front or in-house financing. This dangerous
blending of the health care and finance industries should be discouraged.
3. Increase Oversight of MEDICAL CREDIT CARDS AND Lines of Credit Attached
to Health Savings Account Products. Medical credit cards are now being
marketed specifically for out-of-pocket medical expenses, and some HSA
products now include lines of credit. As these types of products become more
common, the effects on cash-strapped families could be severe. If a patient
has a low credit score or is late with a payment, he or she could pay
exorbitant interest fees and penalties for health care services. These new
products should be closely monitored.
4. Improve screening for eligibility in public or private financial
assistance programs. Health care providers can help reduce medical debt
while maintaining their revenues by improved screening of patient
eligibility for public programs such as Medicaid and State Children's Health
Insurance Programs. Those who are eligible for an assistance program should
be encouraged by the provider to enroll.
5. Enact a Borrowers Security Act. Today there are no legal limits to the
fees and interest credit card issuers can charge. They are allowed to change
the terms on cards at anytime, for any reason--unlike other lenders. As a
result, cardholders often borrow money under one set of conditions and end
up paying it back under different terms. We recommend a Borrower's Security
Act that would limit these practices and restore the balance of power in the
lending relationship.
Peggie Sherry, a cancer survivor and founder of the Tampa, Florida,-based
foundation Faces of Courage, found that the "Borrowing to Stay Healthy
Report" hits close to home: "When I was diagnosed with cancer several years
ago, the cost of the treatment wasn't on my mind. The expenses piled up, but
what other option is there? All I could do was deplete my savings and then
turn to my credit cards to pay the bills. There are millions of others in
the same boat. This research should set alarm bells off in Washington."
To view the full report, "Borrowing to Stay Healthy: How Credit Card Debt Is
Related to Medical Expenses," visit www.demos.org or www.accessproject.org;
individual case studies are included in the appendix of the report.
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http://www.commondreams.org/cgi-bin/newsprint.cgi?file=/news2007/0116-08.htm
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