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|February 20, 2020|
Is the crushing weight of medical debt America's next financial crisis?
Medical debt can be the leading cause of bankruptcy, but it is hobbling Americans in other ways.
About 137.1 million U.S. adults reported medical financial hardship in the last year, per a recent study which also noted the psychological and behavioral toll health care costs can take.
A new survey by Zillow revealed medical debt more commonly keeps Americans from purchasing or renting a home than other types of debt like student loans or credit card debt, reports Bloomberg.
Close to 40 percent of people who have medical debt have been denied a mortgage loan or the opportunity to rent, a higher rejection rate than for other kinds of debt, per Bloomberg.
The survey, which polled 13,000 adults, also found 1 in 5 potential Millennial buyers are bogged down by medical debt and student loan debt.
Medical debt is hurting the credit scores of about 43 million Americans, reports The Atlantic, and medical expenses comprise half of overdue debt. In 2017, 1 in 6 people in the U.S. got an unexpected out-of-network bill despite having insurance.
The New York Times has reported ambulances tend to be the biggest culprit when it comes to unexpected, out-of-network medical bills, followed by the emergency room and elective inpatient visits.
These surprises can arise in both planned and unplanned medical care settings. During emergencies, patients don’t typically have the ability to ensure the ambulance service, hospital or doctor are within their insurance networks. And in scheduled situations, there’s a chance an out-of-network physician has some role in the patient’s care.
Since most Americans don’t have thousands stashed away to cover unexpected medical costs, not to mention costs are higher in the U.S. than in other developed countries, bills can pile up quickly. Some turn to GoFundMe, where a third of the money raised in 2017 was sought for medical expenses, reports The New Yorker.
Dangerous situations can ensue, if those who fear future debt resist seeking necessary medical care, or ration their prescriptions or don’t get them filled at all. Recent surveys have shed light on just how many Americans are taking these steps.
“Even in economic good times, a meaningful percentage of Americans are not going to the doctor or getting their needed medications. In the past, we called these ‘measures of economic crisis,’” Chris Karpowitz, principal investigator of The American Family Survey and co-director of the Center for the Study of Elections and Democracy at Brigham Young University, told Next Avenue.
Almost half of adults are afraid a major health issue could result in bankruptcy, according to a West Health and Gallup poll, and more than three-quarters believe rising health care costs could hurt the economy. That survey, released in April, found Americans borrowed $88 billion to cover health care costs in the previous year.
“Our data shows an American public that’s beaten down from this really serious issue,” Dan Witters, senior researcher at Gallup, told The New York Times.
In some cases, churches across the country, partnering with nonprofit RIP Medical Debt, have stepped in to clear out medical debt for local residents.
Just three states, Wisconsin, Mississippi and North Carolina, forgive some debts once they’ve passed the statute of limitations, per The Atlantic.
“Debt never dies,” Craig Antico, cofounder of RIP Medical Debt, which buys and eliminates medical debt, told The Atlantic.
Action is being taken to address surprise billing, however. At least 25 states have enacted laws that shield patients from surprise out-of-network bills, per Stateline, and at least 20 more are reviewing legislation. Per The National Law Review, there’s similar legislation being considered at the federal level.
Bernie Sanders, Vermont senator and Democratic presidential candidate, has proposed eliminating $81 billion in medical debt and making changes to debt collection and bankruptcy, reports The New York Times. (Source: Business Journals)
Story Date: October 10, 2019