Financial Health and Physical Health Converge as Medical Costs Soar

In the post-pandemic era, financial health is closely intertwined with physical health.

The pressures of paying for healthcare, as deductibles and out-of-pocket expenses increase, are illustrated by findings this month from the Consumer Financial Protection Bureau, which revealed that consumers spent $1 billion in deferred interest payments when using medical credit cards.

The use of those cards has been on the upswing as the average deductibles for people with employer-sponsored insurance have grown 336% in the last two decades, from $650 in 2002 to $1,945 in 2020.

Along the way, the simple act of getting bills in hand, understanding them and finding out what to pay and how has become frustratingly complex. PYMNTS research done in collaboration with Lynx found that 54% of consumers have experienced at least one payment-related pain point in the past 12 months.

Twenty-one percent found the payment process difficult, 18% found medical bills confusing and 8.8% and 6.2% raised concerns about the security of their information and lack of preferred payment methods, respectively.

It’s largely been the case that, with some providers, card payments aren’t accepted, and the paper bills that are sent to patients’ addresses ask for payment to be remitted by check. When medical offices do accept credit cards, they require a paper form to be filled out listing sensitive card-related details — and then mailed back.

Avoiding the Negative Ripple Effects

In the end, a slew of negative ripple effects accrue. Patients become delinquent on their debt, and the medical care providers see their top lines and cash flow streams decline. They also must spend time and money trying to collect on the payments that are owed.

These data points show that there is ample opportunity — and desire — for consumers to have a range of options available to them when it comes to paying their healthcare-related obligations. Installment options break up payments over time, without the attendant interest rate charges that are attached to traditional credit products. As many as 11% of millennials have used installment plans to pay for medical care, and 13% of paycheck-to-paycheck consumers with issues paying their bills have used installment financing.

Other, separate PYMNTS research also in collaboration with Lynx has shown that across all generations and income brackets, consumers want digital healthcare platforms to provide a continuum of services, including those related to paying for healthcare.

More than 70% of consumers stated at the end of last year that they want a platform that helps them arrange financing options for their medical bills. More than 70% want assistance with finding financial services providers to arrange that financing. More than 60% of consumers want platforms to be adept at storing information about health savings accounts (HSAs). Sixty-one percent of patients want the platforms to store their credit card information, and 57% want to store their bank account details on the platforms.

These findings show that, with more digitally-enabled ways to pay, consumers want to safeguard their financial health as they try to maintain or improve the state of their physical health.