Health-Care Costs: The Impact of Medical Bills

As the health-care debate continues, it is important to take note that health-care costs represent the most important financial problem facing families in the U.S., at least according to a Gallup poll. The 17% who name health-care costs as their family's most pressing financial problem is up seven percentage points since 2013 and is just two points shy of the all-time high of 19% recorded in 2007. Besides health-care costs, other prominent financial problems Americans name as the most important facing their family include high debt (11%), lack of money (10%), and college expenses (10%).

The impact of medical bills can be felt across family budgets. In a survey conducted by the Kaiser Family Foundation and the New York Times, 35% of people reported that they could not pay for basic needs such as housing, food, or heat because of their medical bills, while 61% said the expenses made it harder to pay their other bills. The number of Americans who have problems paying their medical bills in a given year runs into the tens of millions. In fact, The Consumer Financial Protection Bureau once reported that medical debt is the biggest factor in negative credit reports. 

In addition to many uninsured folks today and many low-income individuals who can’t afford comprehensive coverage, even people with health-care insurance coverage can face potentially devastating medical bills. Many individuals do not have sufficient financial resources to pay a mid- or high-range deductible, or large out-of-pocket maximum requirements, as these amounts have greatly increased over the years.

The costs of health-care in retirement will be astronomical for many individuals, especially as life expectancy increases. With the disappearance of employment-based retiree medical plans, individuals will need to save much more for their health-care costs in retirement. Even with the best efforts, individuals may not be able to save and have enough for their out-of-pocket medical expenses, either now or during their retirement.

The health-care industry has witnessed significant changes, challenges, and opportunities, and what the future will bring remains unclear. The future of health-care access, delivery, and costs in the U.S. remains uncertain, especially relative to the future life of the Affordable Care Act

Whatever comes from the current health-care debate, unless concerted efforts are made to get at the underlying reasons why U.S. health-care is so expensive and attempt to address these issues, we will continue to see a lot of “cost-shifting,” and much anxiety for individuals, employers, insurance companies, hospitals, doctors, and all health-care providers, consumers, and industry stakeholders. 

No matter the outcome of the federal health-care legislation, I would expect health-care costs to continue to be one of many American families’ most pressing financial problems.

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