In this episode, we are joined by Matt Lattman, Vice President of Personal Loans at Discover to discuss the results of a survey that looked at how Americans dealt with medical debt during the pandemic.
Highlights of this episode include:
- Methodology for conducting the survey
- Perceptions of people with existing medical debt
- Postponed medical care due to debt
- Personal loan option
Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance podcast. A recent survey by Discover Personal Loans looked at how Americans dealt with medical debt during the pandemic. To discuss the results of that survey, I’m joined by Matt Lattman, Vice President of Personal Loans at Discover. Matt, welcome to the show.
Matt Lattman: Thanks so much. Glad to be here.
Mike: We’re happy to have you, Matt. Why don’t you start out by telling us what you were looking at with this particular survey?
Matt: The last two years have had a lot of change, as I think we all know. And with that, people’s needs have evolved as well. Throughout the pandemic we’ve been working with our customers through times of uncertainty, and lots of things come up that might be unexpected. So with this latest survey from Discover, the Personal Loans team wanted to better understand the kind of unexpected expenses that customers were coming up against amid the pandemic. Medical expenses are just one of the expenses families have encountered, and we wanted to dig further into that topic to raise awareness of the payment options customers have when it comes to these kind of costs. And our personal loans might be a helpful solution to [many?].
Mike: Excellent. Matt, can you briefly explain your methodology for conducting the survey?
Matt: Absolutely. We worked with an independent survey research firm to conduct the study and fielded the survey to 1,515 US residents ages 18 and up. Survey was fielded in September from the 23rd to 27th, and we released the results in December of last year.
Mike: Thank you for that. So let’s dig into some of the findings. Matt, what were some of the perceptions of people with existing medical debt?
Matt: So a lot of people have a lot of anxiety about medical debt, and it’s almost to the point where they’re focused on the debt instead of focused on getting well. And this is a signal for me that we have a lot of work to do in terms of making people more aware of other options that they might have, like a personal loan from Discover, and that there’s ways that you can get around medical debt and focus on getting well.
Mike: And we’ve talked about medical debt on this show before, and what we’ve seen and heard from others is that oftentimes people tend to forgo care because of the cost. Did you find a similar result with your survey?
Matt: Yes. Our survey showed that nearly 80% of Americans with medical debt have postponed medical care because of cost, which it’s an astounding number. People are putting off checkups, and that was at 44%. Purchasing medication, 39%, and getting preventative testing, 38%. So this was just, I mean, an extremely powerful and sobering stat for me, of just that people weren’t getting the care that they needed. And so if there are those gaps between what you owe and what insurance will cover and what’s left in savings, personal loans can be an option to help somebody pay off medical debt or other expenses in a lump sum. If you already have that debt and have credit outstanding with multiple medical providers, a personal loan can also consolidate that debt. We found a lot of people use credit cards and had payment plans from their hospitals directly, and so those are options as well, but sometimes that can mean a missed payment or multiple invoices to cover each month. I know I’m probably not alone in not seeing a medical invoice come in the mail and then having to call and try to get a late charge removed. By having a consolidation program like a personal loan, that’s one way to avoid some of the stress involved with paying off your medical bills. So for us, it’s like the finances and the act of paying for things is secondary to actually being able to have a future and move forward in one’s life. And so it really pains me to see that people are not taking their personal well-being– making their personal well-being come first, and something that we really want to try to ensure that there’s options to help people do.
Mike: Yeah. Medical debt can certainly be stifling. And of course, beyond medical debt, other unexpected expenses crop up in life. And we’d love to know what your respondents had to say about how they handled expenses other than medical debt during this time.
Matt: So our survey found that overall, almost 60% of people addressed an unexpected expense because of the pandemic. So this could be because of loss of income, needed repairs to cars and homes, just using their home in a different way. And so about half of that 60% tapped into emergency savings, and a lot of people actually borrowed money from family and friends. So it was a lot of use cases across the pandemic that popped up that people had to handle in unique ways.
Mike: Were you surprised by anything in the findings?
Matt: Absolutely. So there’s been a lot of press and data on record savings levels, but what we found was that nearly one in four of Americans still has less than $500 in a savings account. So while keeping up an emergency savings account is always an important part of maintaining financial wellness, it’s also hard to do, and it’s really hard to do if you don’t do it before the hard times hit. It’s really hard to do in a pandemic economy where emergency expenses are going to crop up. So while saving early on for these is always the best way, it’s not always the most realistic way, and that’s an area where a personal loan or other financing options can cover you through a really tough time.
Mike: Absolutely. And of course, my next question for you– and you’ve alluded to the personal loan option here as well. Love to hear what you think are some options for dealing with that existing medical debt. If you’d like to talk about the personal loans, that’d be great, and then if you have some other thoughts and ideas along with that, that’d be great as well.
Matt: Yeah. So a personal loan, such as one from Discover, can be a great tool. It’s an unsecured fixed term loan, so you have a certain amount of time to pay down a fixed payment every month and are able to use that money up front to not only make payments against existing debt, but also to even have a little to do another project or something else. It’s not specific to only paying for the medical debt, which is a really nice feature. In our case, we offer loans from $2,500 to $35,000. The repayment is up to 84 months, so there’s a lot of options. There’s no application fees, origination fees, early prepayment fees. And that’s actually a really important one, because this is meant as a product for people who have need now. And if you’re in a situation where you’re able to be in a better place in a couple years, you’re not necessarily saddled with the debt. There’s no penalty for paying early and closing the loan early. It’s not something that– obviously it’s probably bad for business for me to say this, but I think it’s something that we expect and encourage customers to do where they can. It’s just doing the right thing. And medical debt can also be consolidated with other debt. So if you have an outstanding credit card or an outstanding store bill that you need to pay down in addition to medical debt, you can roll it all into one loan, which is really nice.
According to another survey that we did, 85% of customers told us that they felt that when they took out a Discover personal loan for debt consolidation it actually improved their financial future. So we really try to– we design the product to be beneficial to customers and help them in their financial journey, and many of our customers do tell us that as well. There are, of course, other options. You can use a credit card to pay bills. Obviously, if you have insurance and that can cover expenses, that’s a great option as well. That can’t always be a solution for everyone. And for those where that’s not a solution, a personal loan is a great other choice.
Mike: Matt, if someone wanted to learn more about Discover Personal Loans, where can they go?
Matt: So you can go to our website to learn more about Discover Personal Loans, discover.com/personal-loans. In addition to information on how to apply, we have a great resource center and calculators to help you get the information you need. You can also call us. Our US based team is amazing. They are truly selfless and can answer any questions about a personal loan and help people along in the process. And if you prefer to do an application over the phone, we will work with you, our team will work with you as well and that number is available on the website as well. And in both cases you can check your rate and see the options available to you without it affecting your credit score. So the initial kind of pricing is done without any effect on your credit score at all, which is a really nice benefit for customers.
Mike: We appreciate all the information you shared with us today. Matt Lattman, thanks for joining us today on the Hospital Finance Podcast.
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