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Examining medical debt amongst the insured

Many in Salem may believe that the key to avoiding financial scenarios where bankruptcy becomes a debt-relief alternative is simply to avoid debt altogether. However, for many, it is not that simple. The leading cause of personal bankruptcy in the U.S. is medical debt. Just how prevalent is such debt? The Centers for Disease Control and Prevention reports that in 2012, an estimated 21.8 percent of American families had difficulties paying their medical bills, while 36 percent overall faced some form of financial burden related to healthcare.

A common fallacy related to medical debt is that it is only a problem faced by those who are either uninsured or underinsured. While these groups are certainly at risk of having difficulties in meeting medical expenses, people who carry government or private health insurance may be just as likely to struggle with paying their bills. In fact, the same CDC report mentioned earlier also showed that of those households dealing with medical debt, 20.9 percent were entirely covered through private insurance, while 21.1 percent were entirely covered through public plans.

For those who have health insurance, the potential of accruing severe medical debt still remains. According to a study conducted by the Henry J. Kaiser Family Foundation, the main sources of medical debt for insured patients included the following:

  •          Cost-sharing plans
  •          High insurance premiums
  •          Out-of-network charges
  •          Coverage limits

For many insured patients, their ability to meet these expenses is often hindered by the fact that immediately following their medical care, they are often forced to miss work while they recover. The lack of income coming in may force them to dip into savings to meet their other living expenses. All the while, medical bills may continue to mount, potentially forcing them into a situation where bankruptcy becomes their only viable alternative. 

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