Could a Common Medical Mishap Bankrupt You?

Could a Common Medical Mishap Bankrupt You?

It's no surprise that health costs can put a major strain on your budget.

In fact, a recent study found that medical bills are now one of the leading causes of bankruptcy in the U.S.—more so than delinquent mortgage payments or credit card debt.

It's not just chronic health conditions or major operations at fault: As The New York Times reports, even a small medical mishap or short hospital stay can lead to a crushing bill.


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The High Cost of Hospital Care

Stitches in particular are a tell-tale illustration of out-of-control prices, the Times points out. Though it's a relatively simple and common emergency room procedure, often completed in under an hour, receiving stitches may lead to hefty four-figure bills—typically at least $1,500.

Hospital charges in general have ballooned in recent years: According to a Journal of the American Medical Association study, hospital charges are now the largest contributor to medical inflation (the price creep of medical costs). And just a single day in an American hospital tallies up to $4,000 on average—five times the price in many other developed countries, the International Federation of Health Plans has found. In some cases, it's even as high as $12,500 a day.

What's to blame? Rising medical equipment prices and drug costs certainly play a role. But likely just as influential is the increasing prevalence of large hospital chains—mergers that often mean less control on prices. "... Prices are basically arbitrary, not connected to underlying costs or market prices,"  Glenn Melnick, a professor of health economics at the University of Southern California, told the Times. Hospitals "can set them at any level they want. There are no market constraints."

RELATED: The 3 Times I Used My Emergency Fund: Was I Right to Dip Into it?

What Can You Do?

Holding health insurance is, of course, the first step to protecting yourself—and it's now required for most of us as part of the Affordable Care Act. But even with insurance, the cost of a hospital stay is rarely covered by a provider in full, and high deductibles can be a big budget strain. The good news: You can attempt to negotiate your medical bills with the hospital before paying—and there are even medical negotiation services (such as Medical Cost Advocate) for those who'd like professional help with fighting charges.

In addition to insurance, make sure you've built (and maintain) a healthy emergency fund consisting of savings to cover three to nine months of net income, depending on your circumstances. That can help cover you in the case of a large, unplanned medical bill—and make sure you don't dig yourself into debt after a minor mishap.


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