It is found through different studies that the younger generation carries most medical debts and more frequently look for easier ways to get rid of it. This is much to the contrary of the common belief that medical debt is something that is categorically existent due to the late life catastrophic ailments. A lot of recent studies show that the young generation in America alone carries a larger amount of this kind of debts in comparison to any older Americans.

According to the latest study report published in Health Affairs, researchers looked for the trends in the Census data and paired it with the anonymized credit records. In this study more than 4 million citizens were considered from the Consumer Financial Protection Bureau’s Consumer Credit Panel.

The data found helped the researchers to determine whether or not a bill past due originated in a medical care setting or anywhere else. The report showed amazing figures such as:

  • One in six Americans have such health care bills mentioned on their credit report
  • The debt totaled $81 billion in all
  • About 53% of these bills amounted to less than $600 each and
  • About 18% of the gross domestic product of the nation is spent in health care.

All these findings are not a one-off incident. In fact it is very consistent and corroborated with the 2017 Urban Institute report that also suggested that medical debt is one of the most common financial burdens in collections in the US.

Furthermore, other reports showed that almost all people had at least one medical bill in collections and out of these people 11% were only 27 years old. This however is the largest share witnessed in the study.

The reason for such alarming stats is that children lose their eligibility for a parent’s health insurance coverage after a certain age as per the Affordable Care Act. This, expert economists feel, that the policymakers should remember.

Medical consolidation loan facts

With such a scenario, the young generation finds it pretty difficult to cover their medical costs and often turns towards different banks and financial organizations, private money lenders and even to find an easy way out.

Most of them take on a medical debt consolidation loan which ideally is the most expensive way to cover medical costs. You must not only have an excellent credit history and credit score to qualify for it and get thee lowest rates offered by the lenders but also take on the added burden of interest which a medical debt typically does not carry. For this reason, you must consider taking on medical loans only after you have exhausted all other available options and also want to include payment plans, other hard to manage debts and medical credit cards.

There are few facts that you should know about medical loans as well before you choose to take on one. These are:

  • Medical loans are much similar to personal loans but are applied for paying medical expenses especially
  • You can use it to consolidate your existing medical debt
  • You can also use it to cover any emergency or planned medical events such as root canals or plastic surgery
  • It can also be used to pay off high deductibles as well as any out of network charges.

Medical debt can occur in many forms as well such as:

  • When you use a credit card to meet your medical bill but do not pay off the credit card debt
  • When you pay your medical bill prior to the car payment or a utility bill that goes to collections eventually.

Sometimes, hospitals waive costly expenses in the form of charity care as they never expect to receive these. As for the other past-due medical bills, these are often handed over to a third party agency for collection.

Insurance and medical debt

There are equivalents when you consider insurance and medical debt and sometimes having a good health insurance does not mean that you will not go into medical debt.  According to a study it was found that between the age group of 27 and 45, the rate of people who have no health insurance drops to about 30%. This is when the medical debts begin to drop as well.

According to the report of National Health Interview Survey conducted by the Centers for Disease Control and Prevention every year since 1957, it is found that there are about three-quarters of Americans who are within 20 and 65 years who have a health insurance but still found it difficult to pay their medical bills. This study signifies a lot of things such as:

  • The policymakers therefore need to do more so that they can confront chronic illnesses such as diabetes and hypertension which is the most significant spending in health care of a vast majority. Economists say that the policymakers should focus into this aspect even before they try to figure out the ways that will reverse these medical debt trends.
  • It is for this reason you must redouble your efforts to find out easy and effective ways to make your health insurance more attractive and affordable. It is especially required by people who are under the age of 44.

The good news is that no medical debt will become so pervasive overnight. It is actually the result of the role of health care as well as your personal finances that will grow the lockstep. The role of health care affects the broader budgetary picture. However, if you want to drive down medical debt, you will need more than insurance.

This trend will align the debt among the young Americans and will not prevent them from creating assets and accumulating wealth, a benefit that their parents and grandparents enjoyed more in comparison.

You will see that wealth among people under 40 years today have only inched up in comparison to the wealth of their parents back in the early 1980s. This is because medical debts haunt the young generation when they try to obtain a good interest rate for a car loan or a home mortgage.

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