Many consumers deal with different kinds of debt in their everyday lives and some can be more challenging to handle than others. One type of debt in particular, though, can have significant negative impacts on a consumer's credit score, and is often difficult to plan for because of the suddenness with which it can strike, and the size of the resultant balances.
Medical debt is a major problem for millions of consumers nationwide, who may see themselves hit with unexpected illnesses and other medical emergencies that can put them into debt so significant they may be forced to avoid routine care that can help save money by catching major medical problems earlier, and even force them into bankruptcy in many cases. As a result, some consumer advocates are now calling on the U.S. Congress to do more for Americans who deal with defaulted medical debt.
Hospital bills cause many to avoid care
In much the same way that regular checkups are the key to maintaining a good credit score, when it comes to maintaining strong health, consumers should try to see the doctor as much as possible for routine tests and evaluations. However, consumers who carry sizable medical debts typically avoid these doctor's visits as a means of avoiding new balances of this type, according to new research from the Journal of Health and Social Behavior. Larger balances and high debt-to-income ratios tend to lead consumers to avoid routine medical and dental attention more often than those who do not have these issues.
In 2010, about 11 percent of all working-age Americans didn't go for a doctor's visit because of the cost involved, the report said. However, those without health insurance were slightly less than three times more likely to forgo this kind of care, and when consumers had a disability but no healthcare coverage, the number ballooned to some 61 percent.
The average medical debts of those who avoided such care amounted to $8,889, up considerably from the $2,783 from those who visited healthcare providers during that time, the report said. And because routine checkups such as these can help to detect serious medical conditions before they become more problematic, and these issues can lead to even more significant debts in the future.
Cancer patients having far more trouble dealing with medical bills
A recent study of patients in Washington state between 1995 and 2009 found that in general, cancer patients are about 2.65 times more likely to face medical bills so significant that they have to file for bankruptcy than those who had less serious illnesses, according to a new study from Health Affairs. In addition, younger people who received such diagnoses were between two and five times more likely to file for protection than Americans over the age of 65 who were in the same group, indicating that Medicare and Social Security may serve as better shields against such weighty decisions.
In all, non-elderly Americans spend about $20.1 billion annually on cancer care, of which $1.3 billion comes directly out of their pockets, the report said. These funds cover co-payments, deductibles, care, prescriptions, and other services. Moreover, these people also tend to lose significant amounts of income while they receive such treatments, and face higher costs for child care as well. In general, breast cancer patients saw about $3,600 in lost wages annually in the five years following a diagnosis, compared with demographically similar healthy workers, who saw increases in earnings of about $1,800 per year.
Groups call for medical debt reporting overhaul
There is now a bill in the U.S. Congress that would allow consumers to see a little bit of relief when dealing with medical debt that they do not currently have, according to a report from the Consumerist. The Medical Debt Relief Act would allow consumers who have paid off or settled hospital bills of $2,500 or less that were sent to collections agencies to have those markings stricken from their credit reports a maximum of 45 days after it was dealt with.
Now, a number of major consumer and business advocacy groups, including the Americans for Financial Reform, National Consumer Law Center, and Mortgage Bankers Association, are calling for lawmakers to pass the measure, the report said. Doing so would allow Americans to better handle these outstanding balances, as well as their finances in general, going forward.
When it comes to maintaining a healthy credit standing, though, consumers should also try to check their credit reports regularly. This will help them to better understand their situation, and also spot any potentially unfair markings, which may be dragging down their scores. If any such entries are discovered, working with a credit repair law firm may be able to help affected consumers put these issues to rights and return their scores to where they should be.