Just in case you haven’t had enough bad consumer financing news of late, along comes more news about consumers’ trouble paying medical bills.

In Trade-Offs Getting Tougher: Problems Paying Medical Bills Increase for U.S. Families, 2003-2007, researchers at the Center for Studying Health System Change have found that 57 million Americans had problems paying medical bills in 2007. This represents a 14 million person increase from 2003: in percentage terms, a 32.6% rise in Americans with health financing trouble in four years.

The Center found that the biggest increase in consumer health financing trouble was among people who had insurance. A large proportion of these people had access to Medicaid and other state financing plans.

2.2 million people with health financial woes declared bankruptcy as a result of medical debt. Nearly 1 in 2 American in medical debt had to borrow money to pay for medical services.

Overall, 19.4% of Americans had problems paying medical bills in 2007, from 15.1% in 2003.

Debt levels range from a low of $800 or less to 25% with debt of $5,000 or more. 10% of those in debt owed $12,000 or more for medical services received and not covered.

People with medical debt make tough trade-offs in family purchasing, according to the Center, selecting between the basic needs of food, clothing, and mortgage or rent.

A new piece of data in this study is that about 10% of people with medical debt report being denied care by medical providers “directly as a result of their medical bills,” the report states. Still others self-ration and deny themselves care due to their already-in-debt status vis-a-vis the health care system.


Health Populi’s Hot Points: Regular Health Populi readers may find me a broken record on the topic of medical debt; in the past year I’ve cited the subject numerous times in numerous ways: a discussion of insured Americans’ problems with bad debt based on a survey by nTelagent; analyzing a Commonwealth Fund study on the subject; and, talking about a Lewin study that quantified the medical cost burden on American families.

Clearly, the medical debt challenge is affecting a growing number of people who are insured…and it’s not only among those on public sector plans such as Medicaid.

Look at the chart on the right, which illustrates new data from Hewitt, the benefits consulting firm, projecting employee contributions and out-of-pocket costs for Americans who receive health insurance at the workplace.

Hewitt estimates that, on average, Americans who receive insurance at work will have over $3,800 in medical outlays in 2009. These will be roughly split between contributions to health insurance premiums, and out-of-pocket costs to providers like doctors, outpatient clinics, and prescription drugs.

This is an increase of 8.9% from 2008, which far, far outpaces Americans’ wage increases in the past year.

The uncertainty in the macroeconomy created by the financial services turmoil in America will seriously, negatively impact the microeconomy that is U.S. health care. The Center found that 1 in 5 Americans faced medical bill problems in 2007, up from 1 in 7 in 2003. The number of those in medical debt can be expected to increase, putting a greater number of American families — across income classes — in financial jeopardy.

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