Patients Paying With Credit

Medical costs over burdening many citizens

Medical costs and many people without health insurance are driving consumers into paying their medical expenses by credit cards.

The following article shows how people, particularly with long term illnesses, are forced to use credit cards to purchase even their high priced medications. – And who benefits from that? None other than the already multi billion dollar rich pharmaceutical companies!

Study finds patients paying with credit

By Matthew Gruchow
Published by ArgusLeader.com, February 16, 2007

Elaine Hicks settles into a comfortable chair and sets her light brown wooden cane aside. Multiple sclerosis has made moving more difficult over the years. “I can get up in the morning and feel good, and then by noon not be able to walk,” she said. “It’s an unpredictable disease.“

For Hicks, 60, the physical effect of her disease is compounded by a financial burden. She is forced to put the cost of her medications on a credit card in order to pay for what Medicare and her limited income won’t cover. “The majority of it goes on the credit card,” Hicks, of Sioux Falls, said. “I do know that I couldn’t just write a check for all of these expenses.”

Hicks is one of a growing number of people for whom medical expenses account for a large part of their credit card debt, according to a new study.

Medical expenses contributed to credit card debt for 29 percent of low- and middle-income households in 2005, according a study by Demos, a nonpartisan public policy group, and The Access Project, a health care community action organization. Overall 20 percent of indebted households reported “having a major medical expense in the previous three years and that medical expenses contributed to their current level of credit card debt.”

“If something happens to you, and you’ve got a big health care bill and maybe insurance that’s not comprehensive, then you’re looking at a lot of money that you’re on the hook for,” said Cindy Zeldin, co-author of the study. “And if you can’t afford it, then what else are you going to do?“

What’s more, a study by the Center for American Progress released last month showed that “the financial security of middle class families further deteriorated in 2005.” From 2004 to 2005, the sharpest increase in economic risks facing middle class families came from rising medical costs, as the percentage of families with enough money to weather a medical emergency continued to drop.

In Sioux Falls, the number of patients using credit or debit cards to pay their bills is on the rise, said Cindy Morrison, vice president of public policy for Sanford Health.

“The whole world of business transactions and payments have really changed for everyone with these cards,” she said. “We are seeing an increase in people using a card, but we don’t know whether that is a credit or debit card.”

In 2005 and 2006, of the entire system’s patient accounts, 9 percent were past due, which is more than 120 days old, Morrison said. The average balance on those accounts was about $1,500.

At Avera McKennan Hospital, accounts at 120 days was 18.7 percent.

$200 per month
Hicks was diagnosed with MS at age 51, and the fatigue and other complications of her disease forced her out of her work as a paralegal. Now, on an income supported only by disability and Social Security checks, she uses her credit card to pay for medications.

“I just have those checks. I can’t do anything about my income,” she said. “I just have to do it this way.”

Last year, Medicare helped pay for her medication. Then, in August, she fell into the so-called “doughnut hole,” where Medicare coverage for prescriptions ceases entirely until medication expenses reach a certain limit, at which time coverage begins again at 95 percent. For the rest of the year, Hicks paid $400-$500 a month for medication.

This year, even with her Medicare coverage, she puts about $200 a month on her Wells Fargo credit card, at 19 percent interest, to cover medication costs. She estimates her total credit card debt at $4,000, which includes the purchase of a motorized scooter to help her with daily activities such as retrieving the mail.While she currently is able to pay her bills, as the interest accrues, Hicks said she knows she’ll probably get behind financially.

Growing up in a generation that looked at credit card spending as taboo, Hicks said having to use a credit card stung her pride.But, she said, “I feel very fortunate to have that card.”

Making arrangements
There are alternatives for some. As soon as a patient knows there will be a balance on his or her account after insurance pays its portion, the patient should make payment arrangements with the hospital, said Lorri Halverson, director of Consumer Credit Counseling Services in Sioux Falls.

Medical bills can go to collection agencies just like any other debt, she said.

“There’s a belief out there that so long as you pay them something, they have to take it, and they can’t send you to collections,” Halverson said. “That’s incorrect.”

“We definitely try to work with people in any way we can, for as long as we can,” said Kenyon Gleason, spokesman for Avera McKennan.

Of patients that needed financial assistance, 99.5 percent of those who applied through Sanford received it, Morrison said.For fiscal year 2006, which ended April 30, Sanford Medical Center, formerly Sioux Valley, approved more than $3.87 million in “charity care,” debt that is forgiven for patients who have no other means of paying their bills, according to Sanford data.

Avera health system’s charity care was more than $12.35 million, Gleason said.

Credit card companies themselves also offer better rates for medical expenses.

The Citi Health Card, for example, lets consumers pay for “planned and elected procedures that are not covered by insurance,” such as LASIK eye surgery, said Samuel Wang, a Citi spokesman.

The card program offers three different payment options: a no-interest payment plan for a specified duration of months, a budget plan at about 12.96 percent interest and then a regular revolving credit plan with a variable interest rate of 20.98 percent, Wang said.

“The first two plans comprise 98 percent of the customer base for the product,” he said.

Plan well
Good planning is the best way to keep credit card debt from growing, Halverson said. Some costs of routine care could be worked into a person’s budget, she said. An example would be setting aside money each month toward a yearly physical.

“If you don’t have benefits, you still need to go in for a yearly physical. You need to plan for it differently than if you had insurance,” Halverson said.

But saving for those sorts of costs is difficult on a fixed income, Hicks said. When she turns 65, she will lose her disability payments, further complicating paying her medical costs, including her medications. She said she sometimes doesn’t take the full dose in order to keep the medication from running out too soon.

“So, I don’t know what I’m going to do then,” she said. “I hope my credit card holds out until that point, but then I won’t be able to pay anything on it at that point.”

Aila Noake
Debt Relief Consultant
www.MyIntegrityDebtOptions.com