Americans with Medical Debt Are More Worried about Making Payments than Getting Better

Rhea-AI Summary

Discover Personal Loans' recent survey indicates that 58% of Americans have taken steps to manage unexpected expenses during the COVID-19 pandemic. The survey reveals that over 40% feel unprepared for medical expenses, with 53% accumulating new medical debt due to the pandemic. Notably, 63% of individuals with medical debt express anxiety about payment rather than recovery. Additionally, 80% of those with medical debt have delayed medical care because of costs, leading to significant financial strain. The findings underscore the importance of personal loans in addressing such financial gaps.

Positive

• The survey indicates that personal loans can aid in consolidating medical debt, potentially saving borrowers substantial amounts in interest.
• 85% of customers reported improved financial situations after obtaining personal loans for debt consolidation.

Negative

• 53% of respondents have taken on additional medical debt since the pandemic began.
• 63% of Americans with medical debt are more anxious about payment than their health.
• 80% of those with medical debt postponed medical care due to cost.

An annual survey from Discover Personal Loans also finds six in 10 Americans took steps to cover an unexpected expense amid the pandemic.

RIVERWOODS, Ill.--(BUSINESS WIRE)-- A new survey from Discover Personal Loans revealed 58% of Americans took steps to address an unexpected expense since the beginning of the COVID-19 pandemic. Whether they felt prepared to handle these expenses varied. Regarding medical expenses specifically, more than four in 10 say they don’t feel prepared to handle these surprise costs.

For those with existing medical expenses, 53% say the pandemic caused them to take on new medical debt, adding to the stress many are already feeling. In fact, Discover’s survey found Americans with medical debt are more anxious about the cost of their medical services than their health; 63% of Americans report that they are anxious about paying for medical debt, compared to 47% who worry about getting better.

“People should be more focused on getting and staying well, rather than feeling held back by medical bills,” said Matt Lattman, vice president of personal loans at Discover said. “If there are gaps between what you owe, what insurance will cover and what’s left in savings, turning to a personal loan might allow someone to pay off medical debt or other expenses in one lump sum, with a lower interest rate than other financial vehicles, and without hidden fees.”

Medical debt forcing difficult choices

In addition to anxiety, medical debt has led to other challenging and potentially harmful choices. Eight in 10 of those with existing medical debt say they have postponed medical care because of the cost, and medical debt has also caused Americans to forego financial commitments:

Care put off by Americans with medical debt, because of cost:			Financial commitments delayed due to medical debt
Routine checkups	44%		Stop paying other bills	37%
Purchasing medication	39%		Skip vacations	37%
Preventative testing	38%		Stop spending on dining and entertainment	35%
Being seen for a sickness	33%		Skip saving for retirement	32%
Surgery	27%		Skip adding to my emergency savings	28%
X-rays or scans	26%		Pay the minimum payment, and no more, for my credit cards	23%
A treatment plan recommended by my doctor	24%		Stop saving for my child’s college	20%
Seeing a specialist	24%

According to Discover’s survey, nearly 3 in 4 Americans with medical debt have more than $2,000 in outstanding payments. And to make these payments, more people with medical debt report using their credit card, 41%, to pay for their care, over their medical insurance, 38%. Others also cited leveraging payment plans from their hospital, 27%, and personal loans, 22%.

Regardless of current medical debt, 58% of Americans addressed an unexpected expense because of the pandemic

Americans most frequently needed to cover unexpected expenses such as auto and home repairs, and emergency expenses. To pay for these unexpected bills, consumers say they resorted to tapping their emergency savings, borrowing money from loved ones and paying their bills later than usual.

What type of unexpected expenses did you need to cover? (Select all that apply)			Since the start of the pandemic, which, if any, of the following have you done to cover an unexpected expense?
Loss of income	60%		Tapped into my emergency savings	29%
Auto repairs	37%		Borrowed money from friends of family	19%
Home repairs	35%		Paid some bills later than usual	16%
Emergency medical expenses	32%		Put large expenses on my credit card	13%

Beyond helping with unexpected expenses, personal loans can help improve consumers’ financial situation. For example, medical debt can be consolidated with other debt, potential saving hundreds, if not thousands, dollars in interest while also simplifying debt to one set regular monthly payment. According to a 2021 Discover Personal Loans survey, 85% of surveyed customers told us taking out a Discover personal loan for debt consolidation helped improve their financial future. ¹

“For many, unplanned costs during the past year created roadblocks in financial journeys, especially for people who were already feeling the strain from other areas of debt and expenses,” Lattman said. “If people do find themselves in one of these situations, the important thing to know is that there are options available, like personal loans, to help bridge gaps in savings while simplifying multiple payments with a fixed payment amount.”

About the Survey

A national survey of 1,515 U.S. residents ages 18 and up was commissioned by Discover and conducted by Dynata (formerly Research Now/SSI), an independent survey research firm, between September 23 and September 27, 2021. The maximum margin of sampling error was +/-3 percentage points with a 95 percent level of confidence. Generations are defined as: Generation Z, born after 1997; millennials, born between 1981 and 1996; Generation X, born between 1965 and 1980; and Baby Boomers+, born before 1964.

About Discover

Discover Financial Services (NYSE: DFS) is a digital banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover card, America's cash rewards pioneer, and offers private student loans, personal loans, home loans, checking and savings accounts and certificates of deposit through its banking business. It operates the Discover Global Network comprised of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance around the world. For more information, visit www.discover.com/company.

¹Figure from an online customer survey conducted September 13 to September 27, 2021. A total of 619 Discover personal loan debt consolidation customers were interviewed about their most recent Discover personal loan. All results @ a 95% confidence level. Respondents opened their personal loan between January and July 2021 for the purpose of consolidating debt. Agree includes respondents who ‘Somewhat Agree’ and ‘Strongly Agree’.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211208005205/en/

Robert Weiss

robertweiss@discover.com

224-405-6304

@Discover_News

Source: Discover Financial Services

FAQ

What percentage of Americans took steps to cover unexpected expenses according to the Discover survey?

According to the Discover survey, 58% of Americans took steps to cover unexpected expenses due to the COVID-19 pandemic.

How has the pandemic impacted medical debt for Americans?

The survey found that 53% of Americans reported accumulating new medical debt due to the pandemic.

What financial strategies are Americans using to manage unexpected expenses?

Many Americans are tapping into emergency savings, borrowing from family, and delaying bill payments to manage unexpected expenses.

What were the main causes of anxiety among Americans with medical debt?

63% of Americans with medical debt expressed greater anxiety about paying for medical services than about their health.

How do personal loans benefit those with medical debt according to Discover?

Personal loans can help consolidate debt and simplify payments, potentially saving borrowers hundreds or thousands in interest.

What types of care are Americans postponing due to medical debt?

80% of Americans with medical debt reported postponing medical care, including routine checkups and preventive testing.