Published: March 2007

Medical Bills on Credit Cards

A report on medical credit card debt reveals that charges for uncovered healthcare expenses are piling up for some American families, putting them at financial risk.

American families are increasingly turning to credit cards to cover out –of - pocket medical expenses. These are the findings of a report by public policy groups Demos and the Advocacy Project. The research shows that those who identify medical expenses as a factor in their growing credit card balances had much higher debt than those who did not.

The report, “Borrowing to Stay Healthy” shows that Americans with insurance find themselves paying unmanageable out- of –pocket expenses for health care.

“Too many working people are piling up debt on high interest credit cards, and risking their financial security, simply because they had the misfortune of getting sick, said Mark Rukavina, report co-author and director of the Access Project.

Key findings include:

• Low and middle income medically indebted households had on average 46% more credit card debt than those without medical debt,  $11,623 versus $7,964.
• Among the medically indebted, young adults, aged 18 to 34, had the highest level of average credit card debt ($13,303) of any age group.
• The medically indebted are more likely to be called by bill collectors than the non-medically indebted (62% versus 38%).

The study’s recommended reforms:

To view the full report go to www.demos.org .Click on “Borrowing to Stay Healthy: How Credit Card Debt is Related to Medical Expenses.

1. Differentiate Medical Debt from Consumer Debt on a credit report.
   National guidelines should be developed to distinguish medical debt from other debt to help consumers avoid poor credit ratings that can ruin a family’s chances at homeownership or even employment.
2. Limit the Entry of Medical Providers into Financial Services.  Patients may feel pressured into accessing in-house financing. The blending of health care and finance industries should be discouraged.
3. Enact a Borrower’s Security Act.  There are no legal limits to the fees and interest credit card issuers can charge. Cardholders often borrow money under one set of  conditions and pay it back under different, more costly terms. A Borrower’s Security act would limit these practices.

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