Health insurance can take some of the cost out of medical bills, but even with insurance, many necessary health care events can come with large out-of-pocket costs. The latest data published by Peterson KFFResearch found that out-of-pocket spending on healthcare has increased by 10.3 percent year-on-year – a trend that is likely to continue as prices rise thanks to high inflation.
If healthcare costs become too high for you to comfortably afford, you may need help financing out-of-pocket costs. Some possible options include using a personal loan to cover additional costs or even a debt consolidation loan to combine multiple debts.
Healthcare cost statistics
- Private health care costs have risen 10.3%year-over-year, according to Peterson-KFF.
- About 30 million Americans are uninsured.
- Alaska and Wyoming have the highest percentage of uninsured Americans, with 12.2% and 12.3% uninsured, respectively.
- American Indian and Alaska Natives, as well as Hispanics, are more likely to be uninsured than other segments of the population, with uninsured rates of 21.7% and 20%, respectively.
- An average three-day hospital stay in the US costs approx $30,000. This alone could put uninsured individuals at risk of bankruptcy and financial ruin.
- In some states, such as Louisiana, Vermont and West Virginia, health insurance costs may be eliminated more than 15% of an individual’s salary.
- Last year, the average American worker paid $1,763 out of pocket before they reach their deductible.
- About 1 in 10 Americans has medical debtwith millions owing a balance of more than $10,000.
- About one in six Americans use personal loans to pay medical bills.
How healthcare works
Many Americans, even those with employer-sponsored health care coverage, are prone to high medical debt. In addition to paying a premium each month, the individual must pay a fixed amount out of pocket before the coverage – known as the deductible – kicks in. While coverage results in lower costs for in-network providers and prescriptions, an unexpected situation does occur. It can take years for the medical bill to be reimbursed.
According to a recent Research from the Kaiser Institute24 percent of adults surveyed said they currently have medical or dental debt that they cannot pay off. The situation is even worse for uninsured Americans, who often use personal loans or credit cards, which can have interest rates of more than 20 percent, to finance their expenses.
However, the way people finance their medical debt is nuanced and based on factors such as gender, socioeconomic status, and race. The KFF research showed that people with a higher income are more likely to take out a personal loan, while people with a lower income are more likely to borrow money from relatives or friends.
Financial consequences of healthcare
When it comes to Americans with health insurance – both public and private – those age 65 and older are the population with the most insurance coverage. In contrast, people between the ages of 26 and 34 have the least coverage.
Here are the percentages of Americans with health insurance in 2023, from those in the 0-18 age range to those 65 and older.
| Age | % of insured persons |
|---|---|
| 0-18 | 94.6% |
| 19-25 | 86.1% |
| 26-34 | 85.0% |
| 35-44 | 87.2% |
| 45-54 | 89.2% |
| 55-64 | 91.8% |
| 65+ | 99.2% |
When the American Cares Act (ACA) was passed in 2010, it helped reduce disparities in health insurance coverage; however, it has not completely eliminated it. The latest report of the State Health Access Data Assistance Center (SHADAC) found that people of color are more likely to remain uninsured compared to their white counterparts.
Here’s a look at how healthcare coverage disparities play out across the country by race.
| Race | % of people covered |
|---|---|
| White | 94.3% |
| Black or African American | 90.4% |
| Spanish or Latino | 82.4% |
| Asian | 94.2% |
| Other/multiple breeds | 91.3% |
People can be uninsured for many reasons, but some of the most common include:
- They think they can’t afford health insurance, even with subsidies.
- Their employer doesn’t offer health insurance and they don’t know how to find it from another source.
- Taking out insurance can be difficult or confusing.
- They don’t think they need insurance.
- They can’t find an insurance plan that meets their needs.
Unpaid healthcare costs
Deciphering all the cash terms and what they mean for your wallet can be confusing. That’s why we’ve broken down the most common terms you can expect to see on your next medical bill.
- Coin Insurance
- The percentage of medical costs you pay after you have met your deductible.
- Copay
- A fixed amount you pay when you receive in-network health care or prescription medications.
- Deductible
- The amount you must pay out-of-pocket for covered health care services before your insurance starts paying.
- Premium
- The amount deducted from your wages each month to pay for your insurance. How much you pay depends on your employer and the health insurance you choose.
The share of healthcare expenditure in the country is highly dependent on age and health status. A KFF analysis found that only two percent of people in the US reported being in poor health; However, the figures change dramatically as people get older, with 20 percent of those over 65 reporting their health as ‘fair’ or ‘poor’.
Peterson-KFF’s health system tracker showed that people aged 55 and older account for the majority of the amount spent on healthcare. Although this age group makes up only 30 percent of the population, it has accounted for 56 percent of total healthcare expenditure in recent years.
| Age | Avg. share of expenditure |
|---|---|
| 0-18 | 9% |
| 19-34 | 12% |
| 35-44 | 9% |
| 45-54 | 13% |
| 55-64 | 21% |
| 65+ | 35% |
Out-of-pocket expenses and costs dropped dramatically during the COVID-19 pandemic. However, Recent research have found that average out-of-pocket costs increase as people return to seeking regular health care. According to Third wayEvery year, millions of working-age American families spend more than 5 percent of their household income on out-of-pocket health care costs. Considering the average household income in the US $87,864As of 2023, this means the average American family will spend at least $4,393 annually on these expenses.
Ways to finance your own costs
Although healthcare costs can be high, you may be able to finance these costs in one or more ways.
A personal loan
People often resort to using personal loans to finance large or unexpected medical bills after discussing all their payment options with the hospital. Lenders can disburse the money within a few days of approval, and depending on your credit, the interest rate is often lower than other financing options. However, you will be stuck with monthly payments for years.
Credit cards
If you get a smaller bill that requires immediate cash, using a credit card can be a good way to pay your medical bills. However, keep in mind that financing large amounts with a credit card can lead to significant high-interest debt if you can’t make the monthly payments.
A payment plan
Personalized payment plans are common among doctors, hospitals and other medical providers. These plans divide a larger amount into smaller amounts that are paid off over time. While these plans are ideal for people with smaller bills, consumers with higher medical bills can end up with high monthly payments for years to come.
A HELOC
A home equity line of credit (HELOC) allows homeowners to borrow against the amount of equity they have built in their home. Depending on the amount of wealth you have accumulated, taking out a HELOC can help finance large amounts of medical debt. However, you must keep up with monthly payments to avoid losing your home.
Frequently Asked Questions
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According to MercerHealthcare costs with employer-sponsored plans are expected to rise an average of 5.6 percent by 2023, according to an HR consulting firm. These increases are likely due to record inflation and increased medical activity following the coronavirus peak, as patients resume their annual healthcare activities. and non-urgent appointments.
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A deductible is the maximum amount you pay in a year for in-network health care services before you reach your deductible. Your maximum amount depends on the plan, but there is a set limit on how high your insurance company can set the maximum. For example, the 2023 deductible cannot exceed $9,1000 for an individual plan and $18,200 for an individual plan. family plan.
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Before you decide to finance medical expenses with a personal loan, it is important to know how much interest you will pay over the life of the loan. To calculate the potential interest on your loan, you can use a calculator or you can use this formula: Loan principal amount x Interest rate x Time (number of years of repayment) = how much interest you will pay over time .
