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Illness can bring credit card pain

A new study finds medical-related costs often lead to skyrocketing credit card debt.

By HELEN HUNTLEY
Published January 17, 2007

Peggie Sherry has health insurance, but since being diagnosed with breast cancer in 2003, her uninsured costs have soared to $40,000.

About $15,000 of that went on three credit cards.

"We did not want to put those bills on credit cards, but we didn't have a choice," said Sherry, 50, who runs the Faces of Courage Foundation, a Tampa organization that provides camps for cancer patients. "It was either that or not get treatment for a disease that was trying to kill me."

Sherry puts a face on a growing national issue: credit card debt incurred to pay medical bills.

Medical debts are a problem for one in five low- and middle-income families carrying credit card balances, according to a report released Tuesday. Demos, a public policy research group in New York, and the Access Project, a Boston center working to improve health care access, teamed up on the report, which analyzed data from a survey conducted by the Center for Responsible Lending in Durham, N.C. The results apply to low- and moderate-income households carrying credit card debt.

Researchers said the degree of the problem is often overlooked because medical debt charged to a credit card is indistinguishable from other credit card debts, yet they said it can create serious problems.

"Medical debt can have an important effect on a person's access to health care," said Mark Rukavina, one of the study's authors. He said people might delay seeking care because they don't want to add to their debt or are embarrassed about it, or sometimes because providers won't give them an appointment because of previously unpaid bills.

Sherry said families facing serious illnesses feel enormous pressure to add to their debt.

"Waking up every morning, the first thought that goes through your head is 'I have cancer.' The next thought is, 'How am I going to pay for all this?' " Sherry said. She said many patients are on reduced work schedules that cut into their income yet they have to deal with providers who demand to be paid up front. "You just have to find any way you can to do it."

Most of those with medical debt in the survey had insurance. Sherry said her policy had a $2,500 annual deductible and co-pays of 20 to 40 percent, depending on the provider.

Researchers said they are worried about growing coziness between the medical and financial services industries exemplified by credit cards sponsored by health care providers and credit lines linked to health savings accounts.

Fast Facts:

Some key findings

- Families with major medical expenses have bigger credit card balances ($11,623 on average) than those with other types of debt ($7,964 on average).

- Young adults with medical debt carry the biggest average balances of any group: $13,303.

- Those with medical debts are nearly twice as likely to report being called by bill collectors than those with other types of debt.

[Last modified January 17, 2007, 00:23:42]