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Report Finds Medical Debt Increasing

By Adrianne Kroepsch, CQ Staff

February 27, 2007 -- Patients are turning to credit cards to meet rising out-of-pocket medical expenses and are accruing heavy medical debt as a result, according to a new report by advocacy groups Demos and the Access Project.

That debt load is "a symptom of problems in our health care system, and it's a drain on families and society," Demos Federal Affairs Coordinator Cindy Zeldin said Monday at a congressional briefing.

The groups took a look at medical debt—a less scrutinized component of oft-studied general credit card debt—in the recently released report, titled "Borrowing to Stay Healthy." The report found that an increasing number of low- and middle-income households are covering medical expenses with plastic and are in higher debt as a result. Among those in the report who claimed to have medical debt, 44 percent cited credit card debt higher than $10,000.

The majority (62 percent) of adults with medical debt are actually insured, Access Project Executive Director Mark Rukavina said. "Obviously, for many people, health insurance isn't quite working."

When medical debt rises, patients show care-seeking behavior similar to those with no insurance coverage at all, Rukavina said, citing a report by the Kaiser Commission on Medicaid and the Uninsured. Indebted patients are less likely to seek a second doctor's opinion, or they avoid seeking health care entirely, he said. Medical debt also "spills over" from the health care arena, he said, damaging credit and lingering for years as "a hole that people have a hard time digging themselves out of."

Medical credit cards now entering the marketplace could worsen the problem, panelists said. The advocacy groups "have some serious concerns" about blending finance and medicine, which could morph the provider–patient relationship into one between debtor and creditor, Rukavina said. "Slapping it on plastic may be encouraged by more and more providers, but it may not be in the best interest of the patient," he said.

The groups want to see medical debt on the political radar during the 2008 presidential campaigns. "It's primary time and everybody is coming out with health plans. . . . it's time to think about what health coverage really means," Zeldin said. "Getting medical debt into the debate is important."

Reps. Pete Stark, D-Calif., and Barney Frank, D-Mass., sponsored the Monday briefing but didn't attend. Chairman of the House Ways and Means Health Subcommittee, Stark is "concerned about medical debt," said committee health policy aide John Rigg. "It illustrates the increasing financial pressure on American families now." The panel intends to take a serious look at medical debt during the 110th Congress, he said.

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