Average direct health care costs | The bank rate
Health insurance can eliminate some health care costs, but it can be much more difficult to pay these costs if you don’t have insurance. Even with insurance, many necessary medical events can involve significant expense.
If health care costs become too high for you to comfortably afford, you can look for ways to cover out-of-pocket expenses. Some possible options include using a personal loan to cover additional expenses or even a debt consolidation loan accumulate several debts.
Health expenditure statistics
- In 2021, 29.6 million Americans under 65 were uninsured.
- 66.6% of US adults in 2021 aged 18-64 had private health insurance, while 21.7% had public health insurance.
- 41% of American adults have some form of medical or dental debt.
- Personal expenses are expected to reach approximately $800 billion by 2026.
- In 2021, the average American employee paid $1,669 disbursed before reaching their deductible.
- On average, spending by U.S. employees 11.6% of their median income on health plan costs.
- About one in six Americans use personal loans to pay their medical bills.
- On average, people save $X from deductions
How Health Care Works
Many Americans, even those with employer-sponsored medical coverage, are susceptible to high medical debt. In addition to paying a premium each month, the individual must pay a fixed amount before the coverage – also known as the deductible – kicks in. Although coverage results in lower costs for network providers and prescriptions, an unexpected medical bill can take years to pay.
According to a recent Kaiser Institute poll, 24% of adults surveyed said they currently have medical or dental debt that they are unable to repay. The situation is even worse for uninsured Americans, who often use personal loans or credit cards to finance their expenses.
However, how people finance their medical debt is nuanced and based on factors such as gender, socioeconomic status, and race. The KFF survey found that those with higher incomes are more likely to take out a personal loan, while those with lower incomes are more likely to borrow funds from family members or friends. .
The Financial Effects of Health Care
When it comes to Americans with health insurance — both public and private — those ages 65 and older are the population most covered by insurance. On the other hand, people aged 26 to 34 are the least covered.
Here are the percentages of Americans with health insurance in 2019, from those in the 0-18 age bracket, to those 65 and older.
When the American Cares Act (ACA) was implemented in 2010, it helped reduce disparities in health insurance coverage; however, this did not completely eliminate him. A 2019 KFF report found that non-elderly people of color are more likely to be uninsured compared to their white counterparts.
Here’s how health coverage disparities play out across the country by race, which the KFF study says likely reflects “more limited rates of private coverage among these groups.”
|Black or African American||89%|
|Hispanic or Latino||80%|
|Native American or Alaska Native||78%|
|Hawaiian or Pacific Islander||88%|
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 does not offer health insurance and they do not know how to find it from another source.
- Buying insurance can be difficult or confusing.
- They think they don’t need insurance.
- They can’t find an insurance plan that meets their needs.
Health costs borne by patients
Deciphering all the reimbursable terms and what they mean for your wallet can be confusing, so we’ve broken down the most common terms you can expect on your next medical bill.
- coinsurance: The percentage of medical expenses you pay after reaching your deductible.
- Co-payment: Fixed fee you pay when you get in-network health care or prescription drugs.
- Deductible: The amount you must pay for covered health services before your insurance starts paying.
- Prime: The amount deducted monthly from your salary to pay for your insurance. The amount you pay will depend on your employer and the health insurance plan you choose.
The share of health expenditure in the country is highly dependent on age and health status. A KFF analysis found that only 2% of people in the United States reported poor health; however, the numbers change dramatically as people age, with 20% of people over 65 reporting their health as ‘fair’ or ‘poor’.
Peterson-KFF Health System Tracking found that in 2019, people aged 55 and over had the largest share of healthcare spending. Although representing only 30% of the population, this age group accounted for 56% of total health expenditure.
Expenses and direct costs dropped dramatically during the COVID-19 pandemic in 2020. A briefing note written by the Employee Benefits Research Institute (EBRI) found that costs were down 12% from 2019 costs. Recent studies have shown that average spending increases as people start to seek regular health care again.
|High percentile median cost||$3,295|
Ways to finance personal expenses
Although healthcare expenses may be high, you may be able to fund these costs through one or more means.
A personal loan
People often use personal loans to fund large or unexpected medical bills after discussing all of their payment options with the hospital. Lenders can disburse funds within days of approval, and depending on your credit, the interest rate is often lower than other financing options. However, you will be on the hook for years of monthly payments.
If you receive a small bill for which you need immediate funds, turn to a credit card could be a good way to pay your medical bills. Keep in mind, however, that financing large amounts on a credit card can lead to high-interest debt if you’re unable to make the monthly payments.
A payment plan
Personalized payment plans are common among doctors, hospitals, and other medical providers. These plans divide a larger sum into smaller amounts that are repaid over time. While these plans are ideal for those with small bills, consumers with higher medical bills could end up with years of large monthly payments.
A home equity line of credit (HELOC) allows homeowners to borrow against the amount of equity they have built up in their home. Depending on the amount of wealth you have accumulated, purchasing a HELOC can help fund large amounts of medical debt. However, you must keep up with the monthly payments to avoid losing your home.