Borrowing to Stay Healthy: How Credit Card Debt is Related to Medical Expenses

Health care costs are rising sharply, placing stress on employers, individuals, and families. As employers look to rein in benefit costs, they are increasingly turning towards health insurance options that feature greater employee cost sharing through higher deductibles, co-payments, and other forms of out-of-pocket expenses. Others are dropping coverage entirely. Financially stretched low- and middle-income families, however, can scarcely afford these higher medical expenses. To meet out-of-pocket medical expenses, many patients are turning to credit cards and accruing medical debt. The use of credit cards for medical expenses can be problematic because the resulting debt is lumped in with all other consumer debt, making this debt not only invisible as medical debt, but also subject to a maze of interest rates and penalty fees. To gain a better understanding of this phenomenon, Demos analyzed data from a national household survey of low- and middle-income households with credit card debt. Included in this survey were questions about medical expenses as a component of credit card debt and health insurance status.