Rising medical costs create unmanageable debt for many Ohio consumers

Although health insurance is now available to more Ohio residents, many still have trouble covering the rising costs of medical care and deductibles.

Medical expenses have become a significant burden for many Cincinnati residents. In the past, many people may have struggled with these costs because they lacked health insurance. However, even with the Affordable Care Act in place today, medical bills and medical debt still threaten to overwhelm many people. Reports show that medical expenses are growing at a pace that consumers may not be able to keep up with.

Increasing expenses

According to CNBC, the costs of actual medical procedures and health insurance deductibles are increasing significantly. A TransUnion Healthcare study that was released in April reveals the following troubling developments:

  • From late 2013 to 2014, the average medical expenses that each consumer faced rose 11 percent.
  • Over the same time period, the average deductible increased 7 percent.
  • The ability of consumers to pay for joint replacements, natural births or C-section deliveries, which are all common procedures, declined 11 percent.

The same report found that overall medical expenses increased less sharply in 2014 than in prior years. However, consumers took on a larger share of those rising expenses.

The increase in high-deductible insurance plans is one reason that consumers face rising costs. In the last five years, average deductible costs have more than doubled, and more providers have started offering these plans. According to USA Today, in 2014, the number of employees enrolled in high-deductible plans rose from 18 to 23 percent. Simply paying these deductibles, which typically are thousands of dollars, may strain many consumers.

Exacerbating factors

According to CNBC, the same TransUnion Healthcare study found that consumers also had less access to credit in 2014. The study compared the average amount of revolving credit available to each consumer with average out-of-pocket medical costs. The resulting Healthcare Cost Ratio fell 13 percent for average consumers and 18 percent for subprime consumers.

If these patterns continue in 2015, many people may struggle to keep up with their medical costs. For some of these people, filing bankruptcy may offer the most reasonable means of debt relief.

Addressing medical debt

People who are burdened with medical debt may be eligible to file Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 bankruptcy, a consumer's assets are liquidated to pay off debt. During Chapter 13 bankruptcy, a consumer enters into a repayment plan in which certain debts are prioritized. Debts that remain at the end of the repayment plan may be eligible for discharge.

Consumers may be able to directly discharge medical debt in Chapter 7 bankruptcy. In Chapter 13 bankruptcy, in contrast, medical debt may be repaid after any secured or priority unsecured debt. Once the Chapter 13 repayment plan is complete, any remaining medical debt may be eligible for discharge.

While many people may be reluctant to think about filing bankruptcy, those struggling with medical debt should not rule out the option. To understand the potential benefits and complications of bankruptcy, these people may benefit from meeting with a bankruptcy attorney. An attorney may be able to help a person better understand this option and, if necessary, navigate the filing process.

Keywords: bankruptcy, Chapter 7, Chapter 13, medical bills, debt