More People Struggle With Medical Debt As Recession Deepens

Main Category: Health Insurance / Medical Insurance
Also Included In: Public Health
Article Date: 14 Jan 2009 - 3:00 PST

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Increasing numbers of people in the U.S. are facing problems with medical debt, an issue likely to figure "prominently in the looming national debate over reforming health care," Kaiser Health News/Washington Post reports. The "booming economy" of the previous two decades "camouflaged the burden of medical debt," as consumers were able to borrow against their homes or charge medical bills to credit cards; however, "falling house prices and tightening credit have eliminated those options for many," according to Kaiser Health News/Post.

"Unlike other forms of consumer debt, ... medical debt is typically involuntary and unplanned, the result of necessity, not desire," according to Kaiser Health News/Post. Medical costs also can have a "snowball" effect, as not paying bills can result in lawsuits, garnished wages, liens and bad credit ratings.

According to the Commonwealth Fund, 72 million U.S. adults younger than age 65 had difficulty paying medical bills or are paying off medical debt in 2007, an increase from 58 million in 2005. Many of those had insurance and 39% said they had exhausted their savings paying for medical bills. Karen Pollitz, director of Georgetown University's Health Policy Institute, said, "People who are underinsured end up facing almost identical problems as the uninsured," adding, "The difference is, they paid for the privilege."

President-elect Barack Obama has said he supports an exemption for medical debt in new bankruptcy laws. A few states have laws that aim either to expand health coverage or prevent medical debt. Kaiser Health News/Post reports that some experts believe a national effort to standardize health benefits and make them more comprehensive will help minimize consumers' out-of-pocket costs and tackle the problem of medical debt. A few states have tried to address the issue through laws that aim either to expand health coverage or protect medical debtors.

American Enterprise Institute economist Thomas Miller said that the issue of medical debt has been exaggerated and is a symptom of larger economic troubles (Boodman [1], Kaiser Health News/Washington Post, 1/13).

Kaiser Health News/Post on Tuesday highlighted five medical debt situations and featured tips for dealing with the issue. Headlines appear below.

• "The Bills Pile Up" (Boodman [2], Kaiser Health News/Washington Post, 1/13).
  
  
• "Insured but in Debt" (Boodman [3], Kaiser Health News/Washington Post, 1/13).
  
  
• "Bankrupt and Banned" (Boodman [4], Kaiser Health News/Washington Post, 1/13).
  
  
• Even With Her Bill Cut in Half, Woman Feels Overwhelmed" (Boodman [5], Kaiser Health News/Washington Post, 1/13).
  
  
• "Credit Card Was No Panacea for an Orthodontist's Bill" (Boodman [6], Kaiser Health News/Washington Post, 1/13).
  
  
• "Tips for Managing Medical Debt" (Washington Post, 1/13).
  

This package of stories was produced through a collaboration between The Washington Post and Kaiser Health News. KHN is an independent news service that provides coverage of the policy and politics of health care. KHN is a service of the Kaiser Family Foundation.

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.