Gameboys or Appendectomies?
Anyone who runs up credit card must be buying too many gameboys. At least that's the view of lots of folks in DC who write the laws governing credit, bankruptcy and the like. I wonder what they will make of a new report released today examines the "medically indebted"--the people who charged medical expenses to their credit cards and then couldn't pay off the bills.
The report is a double indictment. It focuses on the financial impact of an inadequate health care system and lack of health insurance, but just below the surface is a reminder that people are paying 29% interest and $39 late fees as they try to pay off medical debts that have morphed into credit card bills. Nearly 2 out of 3 (62%) of the medically indebted had received calls from debt collectors. That's a great get well call: pay up or we'll make more trouble for you.
There is much talk about personal responsibility and credit card debt. There are undoubtedly many who are thoughtless, or downright abusive, in the use of credit. But the Demos study is a sober reminder that a substantial portion of America runs up credit because they simply can't make it otherwise.
And to make the situation worse, the added stress levels from not being able to pay the medical debts impedes the healing process. Stress hormones interfere with the body's natural ability to fight infection.
When people are sick or injured, we need to make sure that they focus their energies on getting healed. Making people worry about the debt is like kicking them when they are down.
Satellite Sky Blog
Find the Truth. Do Justice.
January 17, 2007 5:19 AM | Reply | Permalink
My partner is a Chapter 7 panel Trustee, and this certainly is what we have been seeing for some time. Twenty years ago, he could guess what was wrong with debtors by looking at the list of doctors in the schedules. Now, everyone pays the doctor with a credit card. So, I guess the cards are a kind of health insurance, because if you have one, you can always see a doctor, and the losses are distributed across the entire population of card users, which is a pretty good stand-in for the entire population. The only odd thing is that the payments for the insurance are distributed across those who don't pay the card every month.
January 17, 2007 7:28 AM | Reply | Permalink
What do hospitals usually charge in interest to people who owe them money? Assuming it's less than than the max on credit card debt, would it not make more sense not to charge their hospital bills but to simply make payments to the provider directly? (Granted, universal health care wouidl make even more ense, but for peopel caught in a bidn right now, this might be the better course to take).
January 17, 2007 9:20 AM | Reply | Permalink
Another related issue is long-term care for the disabled. The care-givers are not in a position to lend money to you. Even universal healthcare probably will fail to address this issue.
January 17, 2007 10:33 AM | Reply | Permalink
You can negotiate payments, and if your local hospital has the ability to manage payments on accounts like that, they may just charge interest and late fees according to their agreement that you signed going in. However, if you are not able to pay a reasonable amount against the balance each month they will probably issue the account to a collection agency, who then hang you out to dry. Sometimes people will use credit cards to buy more time to avoid getting the debt written off by the hospital and issued to collection agencies. What they don't realize is that they are only making the situation worse. Also, it might be necessary to continue to get care from the hospital that is sorely needed. When your life hangs in the balance, a credit card debt seems like a relatively small problem.
The best alternative is to plan ahead, and have a substantial "emergency fund" to help, or at least buy more time in these situations. But even then, a serious medical condition can bring even the most prepared families down, like terminal cancer without cancer insurance. The patient dies a slow death, and leaves a very significant amount of medical bills behind as a result. It seems there should be some kind of insurance against this kind of financial risk. Barring that, they should be allowed to file bankruptcy so the surviving members of the family don't suffer unreasonable financial stress long after losing a family member because they can't pay off debts due to oppresive interest and fees. Or... is it all about the money? Do we care more about money in general than about people? If that is the case, we are really in trouble in this country. Maybe this is a politically correct form of genocide? Create more poverty with debt and then let the poor die?
Jim Anderson
The Truth About Credit
January 18, 2007 8:45 PM | Reply | Permalink
When it comes to healthcare especially in life threatening situations people are not going to concider the cost or if they can afford to pay it. They will go where ever they can get the care they need and sign whatever has to be signed to get it. If the person truly can't pay the bill someone doesn't get paid. That could be the doctor, the credit card company or the collection agency that buys the debt. Eventually that cost gets spread out over everyone that does pay in the form of slightly higher fees. There is no government agency or regulations that control the process it is built in to the free enterprise system and it works automaticly.
February 10, 2007 3:02 PM | Reply | Permalink