Study: Medical Bills Increase Credit Card Debt

People who use credit cards to pay medical bills have greater credit card debt than those who do not, according to a study released on Tuesday by research organizations Demos and The Access Project, the Kansas City Star reports.

For the study, conducted with the Center for Responsible Lending, researchers analyzed data from a 2005 national survey involving 1,150 phone interviews of households that had incomes between 50% and 120% of the local median income and that had credit card debt for three months or longer. The study found that households with medical debt had an average credit card debt of $11,623, while households without medical debt had an average credit card debt of $7,964 (Karash, Kansas City Star, 1/17).

Twenty-nine percent of households reported that medical bills contributed to their debt and, of that group, 69% had a major medical expense in the previous three years, according to the study. Average credit card debt of the uninsured who had medical debt was 32% higher than for insured people who had medical debt, the study found (Teitelbaum, CQ HealthBeat, 1/16).

Adults ages 18 through 34 had the highest credit card debt among those with medical debt, averaging $13,303, compared to an average credit card balance of $7,450 among young adults without medical debt. The report also found that debtors with medical bills were more likely to be called by bill collectors -- 62% compared with 38% of people without medical debt.

The study criticized health savings accounts, high-deductible health insurance plans and "medical credit cards." According to the report, "As these types of plans proliferate, out-of-pocket expenses could grow even more, thus increasing the potential for medical debt."

The report states, "That there is a market for credit cards specifically designed for these out-of-pocket costs indicates that patients are having difficulty meeting these expenses" (Kansas City Star, 1/17). The report recommended establishing national guidelines for identifying and differentiating medical debt; limiting the entry of medical providers into financial services; increasing oversight for medical credit cards and lines of credit attached to HSAs; improving screenings for financial assistance programs; and restricting fees and interest on medical credit cards, CQ HealthBeat reports (CQ HealthBeat, 1/16).

The report is available online. Note: You must have Adobe Acrobat Reader to view the report.