Nerdwallet Study Reveals Increased Medical Debt Among Americans: How Can You Avoid Unnecessary Medical Debt?
Last month, financial health website Nerdwallet revealed findings of a study titled “NerdWallet Health study: Medical debt crisis worsening despite health care policy advances.” Although there are measures in place that should theoretically reduce personal medical debt under the Patient Protection and Affordable Care Act, there are many overshadowing reasons consumers are still struggling with medical debt.
According to the study, medical debt is the number-one cause of bankruptcy in the US. Americans are paying three times more in medical debt each year than for bank and credit card debt combined. Also, this year, about 20 percent of adults will be (or have been) contacted by a collections agency regarding medical debt.
One of the main culprits in continued medical debt is due to rampant billing errors, resulting in overcharges of up to 26 percent. Medical Bill Advocates of America’s Pat Palmer said more than 80 percent of bills they look at have errors.
The study also found that about 63 percent of American adults have received a medical bill that cost more than expected. Despite factors that might cause erroneous charges, 73 percent of adults say that if they were aware of medical costs up front, they would be able to make better decisions regarding their health.
What’s more, is out of pocket spending is expected to grow about 5.5 percent through 2023 – twice the rates of real GDP, so medical costs are going to continue to put an increased pinch on consumers’ wallets. It is estimated that $50 billion in uncompensated care will affect hospitals in 2014. Hospitals can also charge a difference up to 50 times for the same inpatient treatments in the same city, as well as regionally across the US.
Despite the ominous outlook for current and future medical debt, Nerdwallet has provided some tips to avoid medical debt.
- Prepare for treatment needs. While you can’t avoid an accident, you can avoid overpaying for health care. Comparison shop like you would for any other service using price transparency tools for health services, prescription drugs and more. If you prepare ahead of time for known health services, you should be able to avoid surprise medical costs when billing time comes around.
- Stay educated. Educate yourself on financial literacy so that you understand your health insurance coverage, can leverage your FSA/HSA and audit your own bills for errors. An insurance representative or human resources professional from your company (if applicable) should be able to help you become educated on what your coverage entails. Also, if you think you have an error on your bill, contact the provider to walk through it step-by-step.
- Get help from third-party professionals. There are many public and private services to help manage, plan, and pay for medical care. Some states like California even offer free resources to help contest a medical bill. You can also hire medical bill advocates like Medical Bill Advocates of America to help reduce bills. A simple web search should turn up multiple resources.
As a health care consumer, it is important to know your coverage, stay healthy and use resources available to help avoid unnecessary medical debt.
