Chat with us, powered by LiveChat

How Does Medical Debt Create Lingering Financial Problems?

Oct 10, 2022

According to NPR, more than 100 million people in the United States are affected by medical debt 

Looking at the statistics, you can see that medical debt is causing lingering financial problems for people. And the surprising part is that having coverage doesn’t entirely solve the problem.  

In fact, the Kaiser Family Foundation revealed that many Americans who have medical debt had coverage. It proves that whether you have coverage or not, you are likely to be affected by the financial aftermath of having medical debt.  

Medical debt is a problem the government and private sector are yet to find a lasting solution to. So, in this piece, we will highlight how medical debt creates lingering financial problems for people in the U.S.  

  1. Eviction and Foreclosure 

Housing is one of the basic needs of life. When people’s housing is affected, it hurts their finances indirectly, which worsens their financial crisis. That is to say that when you are homeless due to medical debt, you are faced with two significant problems — getting a roof over your head and clearing up your debts.  

A survey shows that about 1 in 12 Americans with health care debt revealed that they had lost their home to eviction or foreclosure, partly because of what they owed. It shows the extent to which medical debt strips people of their precious homes.  

With the current affordable housing crisis in the United States, losing your house will destabilize you both financially and psychologically.  

  1. Lawsuits 

Lawsuits in the U.S. aren’t cheap. It’s stressful enough to be pestered and bugged by calls and emails from numerous collections agents. Now imagine adding lawsuits from health care centers to the many financial challenges you currently face.   

Lawsuits from medical debt drain people who are barely getting by financially. Although there’s been a regulation to stop some lawsuits against patients from medical centers, not all of them adhere.  

  1. Bad Credit Score  

The Commonwealth Fund revealed that people who reported problems paying medical bills experienced lingering financial issues, including damage to their credit ratings and depleted savings. Owing large medical debt can affect your credit score significantly when the health care provider or collection agency adds it to your credit history. Doing this can reduce your chances of getting loans to settle other expenses.  

The last thing you would want to experience is being unable to use credit cards in your time of need. You’re likely to experience this when medical debt has sucked all you’ve got. Businesses would want to avoid you since your credit history shows you are a bad debtor.  

  1. Bankruptcy 

To stay afloat in the face of many lawsuits over medical debt, people tend to resort to declaring bankruptcy. A nationwide KFF poll conducted for this project found about one in eight adults with health care debt are forced to declare bankruptcy.  

Declaring bankruptcy ruins all your effort to build a good credit score. Bankruptcy can also make you lose your credit cards, leaving you at the mercy of asking for financial support from friends and family. These and many more are what people go through when they declare bankruptcy due to unpaid medical debt.  

  1. Rationing Health Care  

An analysis of the county-level debt and disease by the Urban Institute revealed that illness is the highest indicator of medical debt. Such debt leads to people rationing healthcare because they can’t afford it.  

A study shows that two-thirds of adults in the United States owing medical debt disclosed that they ration health care because they can’t afford it.   

When people can’t afford health care, it takes a toll on their finances, causing them lingering health and financial problems.