Credit cards: Many go deep in debt for health care
By Brigitte Yuille • Bankrate.com

As the cost of health care inflates, more consumers are relying on credit cards to stay healthy and alive, accumulating thousands of dollars in medical debt, according to researchers.

"Too many working people are piling up debt on high interest credit cards and risking financial security simply because they have the misfortune of getting sick," says Mark Rukavina, one of the authors of the study, "Borrowing to Stay Healthy: How Credit Card Debt Is Related to Medical Expenses," by the nonpartisan public policy advocacy group Demos.

Take Christie, an Orlando, Fla., woman, as an example. She, along with her husband, has accumulated $25,000 in credit card debt, largely because of an unexpected medical expense.

"We have paid all of our bills on time every month for the last six years and have wasted so much money on interest that it makes me sick to think about it," she says. "This debt has held us back from moving forward with our lives for so long. We dream about the day when we have no debt, money in savings and are able to purchase a home."

Scholars say medical debt is the No. 1 cause of bankruptcy.

Elizabeth Warren, professor of law at Harvard University, says now that the bankruptcy law has changed, more families that are struggling in the aftermath of a serious medical problem will try other options to repay debts such as borrowing more on credit cards, taking out second mortgages or cashing in their retirement accounts.

"Many will still end up in bankruptcy, but only after they have run up even more debt and their last meager resources have been exhausted," says Warren.

The findings
According to the Demos report, nearly three in 10 low- and middle- income household participants with credit card debt say medical expenses contributed to their current credit card balances. The majority of that group had a major medical expense within the last three years.

In fact, 20 percent of the households reported having a major medical expense in the past couple of years and reported that medical costs contributed to their present credit card debt status. These households had $11,623 in credit card debt versus those without medical debt, who racked up $7,964.

The average household used four credit cards, says Tamara Draut, director of the Economic Opportunity Program with Demos. Demos gathered numerical information from a commissioned health survey that looked at credit card use in 2005. Some 1,150 homes were contacted over the phone. They ranged between 50 percent and 120 percent of the local median income, which the study says is half of all households in the country.