Your Credit Cards and Health Care


Many of us have never turned to credit cards to pay for our prescription drugs or to fill a gap left open by our healthcare policies. That may not be a luxury anymore, though.

New studies reveal more than a few disturbing trends. This week, we take a look at the new healthcare way of life and how it affects our personal finances – along with a bit of good news, too.

First up, we thought we’d mention the latest announcement out of the Obama Administration. It’s good news – and possibly the only good news this particular post delivers.

New Protections for Those Who Care for Elderly, Disabled

Last week, the Obama Administration announced that those who care for others with disabilities are now eligible for both minimum wage and overtime protections. Long time in the making, yes? For those affected by the new rules, it’s going to make a world of difference. In fact, many health care workers are on public assistance programs because they cannot afford to live otherwise. No federal protections, no guarantees that they earn a fair living. This is the first change since the mid 1970s to a law that treated in home care providers as companions or babysitters.

For almost 40 years, direct care workers have been denied basic employment rights,

said U.S. Secretary of Labor Thomas Perez.

A fair wage will further stabilize and professionalize this critical line of work, which of course will lead to better quality care.

Health Care and Credit Cards

For years, consumer advocates have been warning that credit card debt due to medical procedures was going to become a massive problem in this country. A new study published earlier this year shows just how big of a problem we’re facing in the U.S.

It found the total spending on medicines fell 3.5 percent in 2012 -from $329.2 billion in 2011 to $325.8 billion in 2012. It also says it’s partly due to a focus on generic drugs, which is good, but the fact that we’re using our credit cards to cover those costs – generic or name brand – is just the tip of the medical iceberg. That’s leading to a disturbing decline being driven by consumers cutting back on health care overall. We’re going to the doctor less and less because we can’t afford to.

More Problems on the Horizon

Problems paying for medical bills and medications remain the most pressing financial problem Americans face, even more so than problems with making their mortgage payments or paying credit card bills – but it could be that keep current with credit card payments means the difference in getting health care or not. Saving money on health costs frequently means cutting corners elsewhere, which was also found to be true in the study.

The annual national telephone poll by Consumer Reports Best Buy Drugs, a free public education project that provides free guidance on the safety, effectiveness, and cost of drugs, fleshes out the truth even further. More than half of survey respondents who take at least one prescription drug said they had to take steps to reduce other household expenses or change how they manage their finances to pay for their medication. Those steps included spending less on groceries, relying more on credit cards, and postponing paying other bills.

Unfortunately, it also means many took potentially dangerous measures, such as putting off a doctor’s visit, declining important medical tests, delaying medical procedures, failing to fill a prescriptions on time or even cutting pills in half without the OK from their doctor or pharmacist.

More than half of us would consider taking out personal loans to cover medical debts, too.

Even as we prepare for the new healthcare laws, credit card companies are rolling more health care credit cards, designed to give consumers more options. It can be expensive, though. Desperate times, desperate measures come to mind?

A big danger in these trends that consumer advocates are warning of include the possibility for abuse via skyrocketing fees and interest rates. The more desperate we become, the more chances we take when it comes to our finances. There’s nothing more stressful than knowing a loved one needs medical attention and having no way to pay for it. And if you’re wondering – 79 million Americans are struggling to cover medical bills and other medical costs.

Friendly Credit?

Unlike their multipurpose credit cards counterparts, health care credit cards offer incentives for fast balance payoffs to avoid the higher than average interest rates. Some have 0 percent interest rates for up to a year, which equates to a 12 months same as cash feature. Others offer up to $40,000 in credit. It’s “friendly credit,” says Ben Slen, director of product strategies for Humana Inc., a health insurance company that launched a Visa health credit card in October 2007 with Republic Bank.

But there are risks; consumer advocates say patients are unfairly hit with offers of credit when they are facing medical crises.

Consumers have to be wary,

according to Andrea Rock, senior editor at Consumer Reports magazine.

It’s a very bad idea to put medical debt on a credit card,

says Dr. Steffie Woolhandler, co-author of a 2005 Harvard University study on medical bankruptcy. That study revealed that a full one-half of all personal bankruptcies in recent years were due in part or whole to unpaid medical bills. Researchers found,

If you have medical debt with a hospital, you may be able to negotiate with the hospital for a discount. Once it’s been turned over to a credit card, there’s no incentive to negotiate.

Some Americans even charge their healthcare premiums to their credit cards and then should they need it, they will place their co-pays and prescription drugs on those same credit cards. It’s a dangerous trend, but one many feel is their only option.

Tell us your story. How are you coping with increasing medical bills, high deductibles, and credit card debt? Would you use your credit card to cover healthcare related costs? And do you think the new healthcare laws will effectively address those concerns?

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