I am pleased to see the Consumer Financial Protection Bureau and other federal agencies requesting information regarding medical credit cards. I hope that any proposed and final regulations prioritize the needs and actions of actual people.

Taken from our own experiences, the role for medical credit cards occurs when someone is truly in need (sort of like making decisions about a funeral without ability to plan ahead). People who require a medical credit card are those who:

1. Are usually trying to figure out how to pay for medical or dental needs “right now”;
2. Have no support to make a good or informed decision (most Americans are not financially proficient and are even worse under stress);
3. Want to cover their bills and don’t intend or want to default on payments;
4. Usually are living paycheck to paycheck where even a new bill will hurt financially and cause emotional stress;
5. Are generally extended on other credit cards and tend to make only the minimum payment, not thinking about the deferred interest requirements of any card and how that affects their credit or their total amount due;
6. Looking for ways to pay off their credit card bills, but are caught in the credit spiral; and
7. Want to make sure the provider they are seeing gets paid for rendering service so they will continue to be seen by their provider.

None of these concerns can truly be addressed through public policy. Still, the request for information and any subsequent rulemaking that attempts to address policy solutions will most likely result in locking in interest rates or possibly putting more hurdles directly on those individuals the regulations purport to help. Any of these regulatory efforts will only make it harder for customers and patients to do what they and their providers need and want: to pay their health-related bills.

My Personal Experience

When we applied for a medical credit card, we met most of the items listed above. In the 1980’s we filed for bankruptcy protection as a result of high medical bills we were unable to cover. While we did come out from bankruptcy, continuing health care costs made it even harder to make ends meet. We were enrolled in fee-for-service health plans which meant we had to pay the providers upfront and wait as long as 90 days for reimbursement. Guess what that did to our cash flow with one of us living with a number of chronic conditions?

Even before applying for the Care Credit card we had used one of our Visa cards to cover physical therapy costs; by the time the insurance payments of only 40% came in, we were unable to cover all the PT costs, thereby building up a hefty balance.

Then a new dental emergency came about and we just didn’t have the savings to cover the new costs. The dental practice would not provide the care until the payment would be made so we applied for and were approved by Care Credit. We knew that if we didn’t pay it off within the 12-month deferral period the interest rate would skyrocket, but when that time came, we were still only able to cover the minimum costs. So now we had two credit cards paying for health care expenses, along with other expenses.

I believe the weaknesses in the system is the overall cost of health care. Although the health insurance market has improved over the years, more and more providers are accepting insurance at the point of care resulting in fewer people have to pay all the costs out of pocket. But for many who tried to save money by buying bare-bones plans or health savings accounts, the cost of catastrophic care is when the cash register begins ringing.

Medical Credit Cards in Real Life

As reported by the CFPB, medical credit cards are not like bank credit cards because of their use requirements. One doesn’t really have the ability to compare the differences in medical credit cards at the point of sale, like when a customer is being pushed into signing up for an affinity card at a retail chain (“if you sign up for the [store name] card, you will immediately get a 20% discount off your purchase today and you can defer interest for [# of months].”). Yet for a patient, they may not be thinking of what happens in 12 months: they need the care today.

Many of the public comments being published in news stories look at how medical credit cards are helping to pay hospital costs, but the problem is much wider – it is all health and health-related costs: the cost of glasses, dental care, physical therapy services; not just a doctor visit or hospital visit, or costs of prescriptions and anything needed as a medical device or other therapeutic. A perfect candidate for a medical credit card would be someone with physical limitations who not only needs to pay for medical visits, physical therapy, and prescriptions, but also needs to see an occupational therapist and purchase devices to help manage life needs, such as cooking, dressing, and bathing. All of these costs can be an unwelcome shock that no one ever truly prepares for, or for their family members.

It has been established that outside of Medicare, most health insurers do not pay health care providers timely. A medical credit card resolves that problem. Our experience found that dentists and many independent physical therapists don’t accept any insurance, or the insurance payments are so low they require additional co-payments up front from patients, so the medical credit cards ensure they will be paid for providing care. Since health care is challenged by both access and affordability, solving at least one part of the challenge can help many people get the care they need. Having a medical credit card can alleviate at least one of these challenges for many people, as long as using the card doesn’t result in additional unintended consequences, such as a decline in one’s credit rating or additional stress-related conditions.

Regulatory Solutions?

First in any regulatory solution is managing health care costs, especially at the point of care for patients. Health care consumers are not usually well-informed about their health care or the actual costs they may incur. While Medicare and other insurers have been looking at ways to make costs more transparent, that transparency will not reflect the actual cost a patient may be required to pay for a specific treatment. Furthermore, if a provider tells a patient that a certain treatment is required, there are very few times when someone will actually be able to shop around for a better price because that means finding a new provider, being examined by that provider and then getting the price from them. In the current health care market, just getting a new appointment can takes weeks, if not months, even when someone lives in an area where multiple providers accept new patients, and by then a health issue will most likely be exacerbated. A patient is not going to go online in an ambulance and ask the EMTs to take them to the hospital with the lowest costs, nor even worry about how to pay for the ambulance trip.

Second, there are no strong policy authorities in place – the current legislative proposal, the Credit Card Competition Act of 2023, will not address any of the concerns raised by this request for information. The proposed legislation is designed to implement competition in the credit card networks in an effort to reduce costs for merchants which could possibly lower costs for consumers (but most likely won’t). The proposed legislation does not appear to impact medical credit cards.

I suggest that any regulatory actions require additional training of health provider staff before allowing them to offer patients an application for a medical credit card. Staff should be trained to help patients investigate or even apply for other financial aid programs before suggesting the medical credit card. I would be surprised if a practice would ever train staff to be financial planners, but in an effort to care for patients, financial needs must be addressed along with their health care needs.

HHS can propose requirements for health care providers to better explain costs under specific diagnostic codes to the patient and the impacts of waiting for care, similar to how some clinicians actually look at a patient’s insurance plan’s drug formulary to see if a medicine is covered under the plan. This would fit under existing rules requiring providers to post information about consumers’ rights, and would also advance the current focus on patient-centered care and shared decision-making. It would be impossible for patients or providers to have honest conversations about health choices when the prices for services are hidden and patients have no way to make informed decisions. Significant changes in banking and financial services occurred over the past decades to protect consumers but no consideration has been taken to look at the impact of health care costs on patients at the point-of-care.

While this request for information is a good first step, it is only part of the wide range of policy improvements that consumers need to make health care and financial decisions today, especially since health care and financial decisions are closely intertwined.