With rising inflation, health costs are hurting the middle class the most, a new report shows

As inflation rose by 7.9% last month, a rate not seen in the United States since the 1980s, experts fear the end will be in sight.

But despite all the media attention focused on rising gas and food prices, the real pain that consumers are increasingly experiencing is caused by healthcare costs, according to new research published today.

The Center’s new report for the new middle class measures the level of financial tension – none, some or large – caused by a range of household costs, as reported by individual consumers. The report compares the pressure on Americans with FICO credit scores below 700 – known as indirect consumers – with those with higher scores – known as major consumers.

In the last quarter of 2021, the number of households that reported that current spending puts a heavy strain on their finances rose sharply, especially for non-first-class Americans.

Energy costs have caused financial strain for most Americans, who are not first-class, but the biggest increase in tension in this group has been health care, which has risen more sharply than any other cost category.

Overall, 31% of non-first-class Americans reported financial tensions over cash costs – nearly a 50% increase between October 2021 and February 2022 compared to the pre-pandemic period. In contrast, 23% of leading Americans reported tensions over health care costs, which is still a significant but only 3-point increase compared to the pre-pandemic period.

One-quarter of Americans who are not first-class reported that the cost of health insurance caused them tensions – more than 50% more than before the pandemic.

“We’ve known for years that health care costs are squeezing American households, but low-quality Americans in particular are increasingly burdened by health care costs as headline inflation takes its toll,” said Jonathan Walker, executive director of the New Wednesday Center. Class and author of the report: “The increase in the number of households experiencing problems is worrying.”

The onslaught of medical bills on middle-class Americans is not new. However, Walker says he was surprised by the sharp rise in tensions over health care costs.

“I was surprised that inflation in this category will affect consumers so quickly,” he said. “Nevertheless, it says a lot about what interchangeable household expenses are. When costs increase elsewhere, your higher spending may seem much less manageable. ”

Walker asks how many more non-first-class Americans can be criticized for not having the same access to credit as their first-class counterparts, making it difficult for them to cope with unexpected health costs.

For millions of Americans struggling to afford health care, taking on medical debt may be necessary. According to the Consumer Financial Protection Bureau, $ 88 billion in medical receivables appeared in consumer credit reports in June 2021. Credit Karma, a personal finance company, says its members have taken over another $ 1.9 billion in medical debt during the pandemic.

Manu Lakkur, Product Director, Credit Karma, offers the following suggestions for consumers seeking to absorb their medical bills:

  • Find out what your health insurance will cover and what you won’t. If you have health insurance, Lakkur says understanding what is covered – and what is not – can help you protect yourself from surprising bills that can be difficult to absorb.
  • Ask what you may be charged. If you do not have insurance, ask before you receive care – if possible – what you are likely to be charged. Lakkur says it can only give you a shooting range, but it can still help you overtake your bill.
  • Negotiate. Ask for a lower rate, especially if you pay out of pocket and don’t go through insurance. Lakkur says there may be special rates for uninsured people. If you do not have insurance at all or your insurance does not cover a specific procedure, Lakkur suggests using resources like the Healthcare Bluebook to compare what others are charging in your area.
  • Check and keep your medical bills. Check your medical bills for errors, and if you see something that seems wrong or doesn’t make sense, contact your billing office.
  • Request a payment plan. Hospitals and other health care providers are increasingly offering financing options and often allow you to spread your bill over many months or years, sometimes without interest. Setting up a payment plan can improve the manageability of your accounts, prevent your health debt from accruing, and help protect your credit. Some providers now offer “buy now and pay later” financing options.

And most importantly, Lakkur said, ask for help.

“Ignoring one’s own health is never the right choice, even for those who have financial problems,” he said. “If you think you will have a problem covering your healthcare costs, get in touch at the beginning of the process. If you proactively report a problem at the beginning of the process, healthcare providers can help you assess your options. ”

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