With rising inflation, medical costs are hurting the middle class the most, new report finds

With inflation at 7.9% last month, a rate not seen in the United States since the 1980s, experts fear there is no end in sight.

But despite all the media attention focused on rising gas and grocery prices, the real pain consumers are increasingly feeling is due to health care costs, according to new research released today. today.

The new report from the Center for the New Middle Class measures the level of financial strain – none, some or a lot – caused by a range of household costs, as reported by individual consumers. The report compares the strain on Americans with FICO credit scores below 700, known as unpreferred consumers, to those with higher scores, known as preferred consumers.

In the last quarter of 2021, the number of households reporting that normal expenses weigh heavily on their finances rose sharply, especially for unprivileged Americans.

Utility costs have caused financial hardship for most unprivileged Americans, but the biggest increase in pressure for this group has been health care, which has risen more sharply than any other spending category.

Overall, 31% of unprivileged Americans reported financial hardship due to out-of-pocket healthcare costs, an increase of nearly 50% between October 2021 and February 2022 compared to the pre-pandemic period. In contrast, 23% of blue-chip Americans reported strains from health care costs, still substantial but up just 3 points from pre-pandemic.

A quarter of unprivileged Americans said the cost of health insurance was causing them stress — a jump of more than 50% since before the pandemic.

“We have known for years that the cost of health care weighs on American households, but unprivileged Americans in particular are increasingly strained by health care costs as global inflation makes havoc,” said Jonathan Walker, executive director of the Center for the New Middle. Class and the report’s author: “The increase in the number of households feeling the pinch is concerning.”

The pressure of medical bills on middle-class Americans is not new. But Walker says he was surprised by the sharp increase in pressure associated with health care costs.

“I was amazed that inflation in this category was impacting consumers so quickly,” he said. “Yet it says a lot about the fungibility of household spending. When costs rise elsewhere, your larger expenses may seem much less manageable. »

Walker wonders how squeezed more unprivileged Americans may be because they don’t have the same access to credit as their privileged counterparts, making it harder for them to manage unexpected medical expenses.

For millions of Americans struggling to pay health care costs, incurring medical debt may seem inevitable. According to the Consumer Financial Protection Bureau, $88 billion in medical debt collections appeared on consumer credit reports in June 2021. Credit Karma, a personal finance company, reports that its members incurred $1.9 billion in extra dollars in medical debt during the pandemic.

Manu Lakkur, Product Manager at Credit Karma, offers these suggestions for consumers who are struggling to absorb their medical bills:

  • Know what your health insurance will and will not cover. If you have health insurance, Lakkur says understanding what’s covered and what isn’t can help protect you against surprise bills that can be difficult to absorb.
  • Find out what you might be charged for. If you don’t have insurance, ask before you seek treatment, if possible, what you’ll likely be charged. It might only give you a rough range, Lakkur says, but it can still help you get ahead of the bill.
  • To negotiate. Ask for a lower rate, especially if you’re paying out of pocket and not going through insurance. Lakkur says there may be special rates for people without insurance. If you don’t have insurance at all, or if your insurance doesn’t cover a particular procedure, Lakkur suggests using resources like Healthcare Bluebook to compare what others charge in your area.
  • Review and keep your medical bills. Review your medical bills for errors and contact the billing office if you see anything that looks wrong or doesn’t make sense.
  • Ask for a payment plan. Hospitals and other health care providers are increasingly offering financing options and often allow you to spread your bill over months or years, sometimes without interest. Having a payment plan in place can make your bills more manageable, prevent your medical debt from being collected, and help protect your credit. Some providers are now offering “buy now, pay later” financing options.

More importantly, Lakkur said, ask for help.

“Ignoring your health is never the right option, even for those who are struggling financially,” he said. “Speak up early in the process if you think you will struggle to cover your healthcare costs. If you proactively raise the concern early in the process, healthcare providers can help you weigh your options. »

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