Recent evidence suggests that the Affordable Care Act is helping to reduce the burden of medical debt for American consumers. Yet, especially in states that have not expanded Medicaid, millions of Americans still lack insurance and many plans offer thin coverage. The result is that in 2014, 64 million people were struggling with medical debt, the leading cause of bankruptcy in the United States. In my latest Demos report, “Enough to Make You Sick: The Burden of Medical Debt,” I explore how medical debt affects household finances and why we need more aggressive policies to reduce medical debt.

My report details the results of two surveys (in 2008 and 2012) Demos commissioned to explore the finances of lower to middle-income households carrying credit card debt. I find that households carrying medical debt on their credit card are more likely to take extreme measures to pay off their debts and forgo care. Medical debt has significant negative impacts on household finances, even when people are insured. A public option could help reduce the chances of people taking on medical debt, and that more rigorous consumer protection could mitigate the consequences.

The Good News

I compare the 2008 and 2012 surveys to find trends in credit card debt. Among those with medical debt on their credit card (the “medically indebted” for the purposes of my report), average total credit card debt fell from $11,019 in 2008 to $8,762 in 2012, a 20 percent decline. Medical debt alone fell from $2,055 in 2008 to $1,679 in 2012, an 18 percent decline. One likely source of these declines is the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). Studies show that the CARD Act dramatically reduced fees for credit card users. Research by the Consumer Financial Protection Bureau suggests the CARD act reduced hidden credit card fees, saving consumers billions of dollars. Households are also carrying less credit card debt due to out-of-pocket medical expenses and medical debt that is not on credit cards. It’s possible the Affordable Care Act played a role, but many of its key provisions hadn’t been in effect for long enough to conclude that they played a major part in the decline. However, these declines could also be explained by the improving economy. While the situation has become rosier across the board, my research suggests large negative impacts for households that are carrying medical debt.

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