In Elderly Americans, Rising Debt May Adversely Affect Health

In a study using credit bureau data, Dr. Mudrazija and Dr. Butrica documented the disparity. “In ZIP codes where people are better off, older people carry mortgages, but they pay them off,” Dr. Mudrazija said. “Where people are poorer, they seem to carry debt indefinitely.” They are also more vulnerable to predatory payday lending.

What could help seniors avoid these credit traps, apart from higher incomes and more comprehensive health insurance? (In 2020, one-fifth of Medicare beneficiaries over 65 paid $2,000 or more out of pocket, beyond the premiums themselves, according to a study by The Commonwealth Fund.)

Dr. Lusardi advocates financial literacy training in workplaces, where employers are more apt to emphasize retirement savings than debt management. Some borrowers don’t grasp fundamentals such as the way interest compounds, she said.

“We have made it very easy to borrow,” she said. “We also need to help people make good decisions.”

But regulating credit, providing clearer consumer information and reining in predatory lending practices could also reduce high levels of unsecured debt, Dr. Mudrazija said.

Last fall, Ms. Revel got a call out of the blue. The nonprofit RIP Medical Debt, which uses donated dollars to buy bundled medical debt, had acquired her long-outstanding emergency room debt of $2,728.50 and erased it. “I was so grateful,” she said.

Unable to work, relying on disability payments, Ms. Revel is now ensured by Medicare and Medicaid, shielding her from most future medical debt. She is down to the last three months of car payments and “I’m counting the days.”

But she still owes a local group of vascular specialists $5,000. At a negotiated $25 a month, she will be nearly 80 when she pays it off.

Article source: https://www.nytimes.com/2022/06/05/health/elderly-medical-health-debt.html