Apr 6, 2023

Recent articles

CCLP’s 2024 legislative wrap-up, part 2

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs. Part 2/2.

CCLP’s 2024 legislative wrap-up, part 1

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs.

CCLP testifies in support of Clean Slate updates

Bethany Pray, CCLP’s Chief Legal and Policy Officer, provided testimony in support of House Bill 24-1133, Criminal Record Sealing & Expungement Changes. CCLP is in support of HB24-1133, as it is one of our priority bills.

Impacts of Medical Debt

by | Apr 6, 2023

The previous posts in this series discussed how credit reporting works and why CCLP believes medical debt should not be included on credit reports. However, medical debt impacts several other areas in a person’s life, including household finances, physical and mental health, and access to housing. Take Nobel Prize-winning physicist, Leon Lederman, for example, who sold his Nobel Prize medal for $765,000 to pay medical bills. Like Mr. Lederman, every day Americans are making extraordinary sacrifices to pay for medical care.

 

Personal Finances 

Medical debt can have devastating impacts on a household’s financial health. The effects of medical debt on household finances can often mean forgoing basic necessities like,  “cutting spending on food, clothing, and other household items, spending down their savings to pay for medical bills, borrowing money from friends or family members, or taking on additional debts.” 

Many consumers choose to pay off medical debt using personal loans or credit cards. One study found that 1 in 3 credit card holders are in credit card debt due to medical bills, whom felt “they had no other option” to be able to afford their medical bills.  Some health care providers have even begun offering “medical credit cards” – cards marketed to patients as a way of paying medical and dental bills, many of which have deceptive interest rates that can hurt consumers. Medical credit lines are a multi-billion dollar industry, and the interest rates on these cards often exceed a traditional bank loan. These lines of credit can compound into greater strains on a household’s finances.  

Another devastating outcome from medical debt is bankruptcy. “Medical bankruptcy” is not a legal term or a specific type of bankruptcy, however medical debt is often included as part of bankruptcy claims. One study found that 66.5% of people who file for bankruptcy cite either medical expenses or illness-related work loss as at least one reason for their bankruptcy. This same study estimates there are 530,000 medical bankruptcies in the US annually. Bankruptcy information can stay on a credit report for seven to ten years and can dramatically lower a credit score by up to 240 points 

The financial burden of medical debt is a major stressor which can compound with health conditions into serious implications for physical and mental health. 

 

Physical and Mental Health 

Personal debt and financial hardship are strongly correlated with poor mental health, which can exacerbate adverse effects of other health conditions. A Consumer Financial Protection Bureau (CFPB) study found that medical debt worsens mental health conditions and is strongly correlated with increased chance of suicide. Many people who carry medical debt describe feelings of anguish and have higher rates of anxiety and depression. Medical studies have shown that poor mental health is a risk factor for chronic health conditions, and vice versa. 

Medical debt often creates barriers to accessing necessary healthcare. Many people with medical debt report skipping essential medical services and appointments out of fear of going further into debt. For people with chronic health and disabling conditions, skipping or spacing out certain medications can have life-threatening results, including the inability to pay for insulin copays and tragically losing their life as a result. Some people are even denied care due to their medical debt. For the children who live in these households, the effects of medical debt ripple into their lives and health.  

A Journal of Clinical Pediatrics study found that 1 in 5 children “live in households that struggle with medical debt” which “lead[s] to adverse health outcomes for children” and is a strong predictor of physical and mental health outcomes for children. Furthermore, medical debt is associated with higher rates of infant and maternal mortality, and instances of “Adverse Childhood Experiences.” Furthermore, in households with children, medical debt significantly increases rates of food insecurity, where other types of debts were not found to be correlated.  Food insecurity has been linked with “health and developmental risks in young children.” The downstream effects of medical debt harm on not just the adults who incur it, but also those who depend on them. 

 

Housing

Housing instability as a result of medical debt is common. According to one study, 27% of people with medical debt “experienced housing related problems.” Housing problems related to medical debt include: “missed mortgage or rent payments, property tax liens, difficulty qualifying for loans, eviction, disruptive moves to less expensive housing, rental applications denied and in extreme circumstances, homelessness.” Another survey found that 70% of people cited medical reasons were at least one cause leading to their home foreclosure. In fact, a study on the relationship between medical debt and homelessness found that having even small amounts of medical debt increased the amount of time a person experiences homelessness by two years.  

The impacts described in this post only scratch the surface of the devastation and hardship medical debt has on peoples’ lives. This is a massive systemic issue that needs to be addressed through policy. One of CCLP’s priority bills, House Bill 23-1126 is one piece of the puzzle. HB23-1126 would ensure medical debt information not be included on credit reports or factored into credit scores in Colorado. We shouldn’t add to the suffering of people by including medical debt information on people’s credit scores. While HB23-1126 can’t alleviate all the hardships caused by medical debt, it can provide some much-needed relief for some of the burden and stress. 

Recent articles

CCLP’s 2024 legislative wrap-up, part 2

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs. Part 2/2.

CCLP’s 2024 legislative wrap-up, part 1

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs.

CCLP testifies in support of Clean Slate updates

Bethany Pray, CCLP’s Chief Legal and Policy Officer, provided testimony in support of House Bill 24-1133, Criminal Record Sealing & Expungement Changes. CCLP is in support of HB24-1133, as it is one of our priority bills.

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.