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Healthcare debt management – keep your credit score high while avoiding bankruptcy

In an April 2006 WebMD article, Todd Zwillich reported that Americans are dissatisfied with their healthcare coverage, and regard it as some of the worst care in the world. The National Coalition on Health Care illustrates why this is so: America is the only first-world country in the entire world that does not offer universal healthcare. As a result, about 47,000,000 people in this country have no health insurance. The consequence of this fact: Medical bills constituted around 50 percent of personal bankruptcies in 2001, according to a Harvard Medical School study led by Dr. David Himmelstein et. al.

Medical bankruptcies affect every area of a person's life. They can destroy credit scores, can leave people homeless, and can cause insurmountable debt. And, sadly, in many cases, existing medical bankruptcies could have been avoided by adequate health coverage.

The reasons for this bankruptcy-by-coverage gap are subtle, but pernicious. This country has rapidly lost lucrative blue-collar careers to outsourcing; meanwhile, in a hyper-competitive economy, even some college graduates find themselves working in part-time, low-paying jobs such as retail or food service. Then, there are the roughly 70 percent of Americans who have not gotten college degrees (28 percent of Americans have completed college, according to the 2004 U.S. Census) competing for jobs.

More and more jobs do not provide health coverage (at least not for part-time workers), and many working- and middle-class workers cannot afford to pay for high-cost, individual monthly plans alone. Even Americans fortunate enough to be covered by their employers find that they must pay lager and larger premiums each year, as reported by Himmelstein at Harvard Medical School.

And, poor or no coverage can have serious consequences. Experts like Himmelstein agree that patients with shoddy or no health plans delay seeking treatment for debilitating illnesses, especially those requiring constant monitoring, like Type II (or, adult-onset) diabetes and hypertension. Uninsured or underinsured individuals are also more likely to delay medical treatment for suspicious lumps, skin marks, coughs, pain, and other warning signs of cancer and terminal illness. When these Americans do seek medical coverage, it is for a crisis situation. They might be admitted to the hospital, and can amass thousands of dollars in medical debt – and this debt, insurmountable to low-income individuals, begets bankruptcies.

If you are uninsured or underinsured, it is absolutely imperative that you seek consumer credit counseling services immediately – this step can save you from filing for bankruptcy, should a health emergency occur. A debt management counselor can help you formulate a plan to save for routine health maintenance and health emergencies. You might also be advised to explore healthcare options for low-income and uninsured individuals. Medicaid is one option; free clinics or low-cost, sliding-scale medical treatment centers are another. Some people opt to purchase low-cost healthcare packages with high deductibles (the amount the consumer is responsible for before the insurer picks up the tab). Many of these plans do offer affordable co-pays for routine care and/or tax-free healthcare savings account options.

Avoid medical debt and bankruptcies. If you are uninsured or underinsured, seek a reputable credit counselor, and learn ways to better manage your healthcare debt.

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