NEW YORK (TheStreet) — Fully a quarter of Americans claim more medical debt than savings, says a study from Bankrate.com — a number that rises the further you slide down the income scale. Forty-four percent of Americans earning less than $30,000 a year report having more debt than savings, and that's a demographic group with no room for financial error.
Medical debt can really wreck a consumer's finances. According to the Federal Reserve, medical debt accounts for half of all consumer credit agency collection activity, and 78% of consumers in a Center for Consumer Recovery study called medical debt the primary reason for their going into bankruptcy.
In the Bankrate study, 55% of consumers say they were either "very worried" or "somewhat worried" about being overburdened by medical debt.
"These results show that more than half the population feels financially insecure when it comes to health care," says Doug Whiteman, an insurance analyst at Bankrate.com. "This is an issue that affects consumer confidence and the broader economy."
The issues seeps over into the volatile subject of health care coverage, where an equal number of Americans (55%) worry they won't have direct access to good health care insurance, compounding the worry that consumers could face even more medical debt despite health care reform designed to cut medical bills for millions of Americans.
"This might suggest that many people are either uninformed about the exchanges or lacking confidence in the Affordable Care Act," Whiteman says.
Americans with too much medical debt should meet with a consumer credit counselor and craft a reduction plan that doesn't threaten their ability to save. (The Federal Trade Commission has a good tutorial on how to handle medical debt issues here.)
Worried consumers should also get to know how the Affordable Care Act could work in their favor by helping them buy subsidized health insurance that can ease future medical debt burdens. (Visit Healthcare.gov for information on how to access good health care coverage via the ACA.)
Most Americans likely slid into medical debt because they didn't have the right insurance (or any). Getting up to speed on how to curb medical debt will not only take the worry way from dealing with high medical costs, but leave consumers with more cash for emergencies.
That may be the biggest benefit of all from getting educated about medical debt and access to decent health care coverage.