Why Health Coverage Matters More Than Your Budget
Without adequate healthcare, even the best financial plan can crumble—and what you can actually do about it
(This post is updated from one originally published on October 15, 2020)
Hi there, how are you? No really, how are you?
In this post I want to talk about something that most financial advice conveniently ignores: the role of health coverage in your ability to achieve financial security.
Because here's the uncomfortable truth: You can budget perfectly, save diligently, and make all the "right" financial decisions—and one medical event can still derail everything.
This isn't a personal finance problem. This is a systemic problem that shows up in your personal finances.
And until we're willing to talk honestly about it, people will keep blaming themselves for struggling financially when the real culprit is a broken healthcare system.
The Three Tactics (That Aren't Always Enough)
If you've ever worked with a financial coach or read personal finance advice, you've probably heard the three ways to improve your cash flow:
Increase your income
Decrease your expenses
Do both
And for some people, this works. They increase their income, cut unnecessary spending, and start building an emergency fund.
But then they get sick. Or injured. Or diagnosed with a chronic condition.
And suddenly we're asking three different questions:
Do you have access to healthcare?
Do you have health insurance?
Do you have enough health insurance to cover this medical event?
Too often, the answer to at least one of these questions is "no."
And when that happens, all the budgeting in the world won't protect you from financial catastrophe.
A Story from My Earlier Life
Let me take you back to when I was 24 years old.
That summer, I went three months without health insurance. I had just left a job with employer-sponsored coverage, was waitressing to pay my bills, and would start grad school in the fall where I'd get student health coverage.
My mom was worried. This woman loves to worry, and she asked me again and again, "What if you get hit by a car?"
"I won't," I replied casually. "And anyway, I don't make enough money right now to pay my rent and pay for health insurance."
I reasoned that I would do without until I could get affordable coverage at the university.
Luckily, I didn't get hit by a car that summer.
But this memory comes back to me whenever I hear someone say that mandated health coverage is bad because it "impedes personal freedom."
What the subtext often is: Mandated health coverage is bad because it's too expensive for someone who is waiting tables to pay the rent.
When people don't have health insurance, it's usually not because they don't want it. It's because they can't afford it.
And that's a problem we need to talk about.
Why People Don't Have Health Insurance
There are certainly non-financial reasons why people lack health coverage, but cost is the primary barrier.
Common reasons people lose or can't afford coverage:
→ They lost employer-sponsored insurance or changed to a job that doesn't offer it
→ They make slightly too much to qualify for Medicaid but not enough to afford premiums
→ They got divorced and lost coverage through a spouse
→ A family member who held the insurance died
→ They aged out of their parents' coverage
→ Premiums and deductibles are simply unaffordable on their income
Even for people who do have insurance, high deductibles and out-of-pocket maximums mean they're essentially underinsured. They have coverage on paper but can't afford to actually use it.
What Happens When You Don't Have Adequate Coverage
The numbers tell a devastating story:
→ Nearly one-third of adults are paying off medical bills over time
→ Medical debt in collections averages around $2,200 per person
→ Medical debt is the leading cause of bankruptcy in the United States
→ Even after the Affordable Care Act, an estimated 500,000 households each year file for medical bill-related bankruptcy
Let me say that again: Even people with insurance are going bankrupt from medical bills.
How are you supposed to save for a down payment on a home, put money aside for your children's education, or build retirement savings when you're drowning in medical debt or avoiding necessary care because you can't afford it?
The answer is: you can't.
And that's why so many people feel stuck financially—not because they're bad with money, but because the system is stacked against them.
The Drag on Financial Progress
Think about what medical debt does to your financial life:
It destroys your credit. Medical debt in collections tanks your credit score, making it harder to get approved for a mortgage, car loan, or even an apartment. It raises your interest rates on everything.
It drains your cash flow. Monthly payments on medical bills mean less money for savings, debt payoff, or investing in your future.
It delays your goals. That down payment you've been saving for? Gone to pay off a hospital bill. The career change you wanted to make? Can't risk losing employer-sponsored insurance.
It creates constant stress. You're always one medical event away from financial disaster. That stress affects your mental health, your relationships, your ability to focus at work.
This is the hidden cost of our healthcare system—and it's enormous.
During Crisis, It Gets Worse
During economic downturns, government shutdowns, or global health crises, these problems intensify.
People lose their jobs—and their health insurance. They delay necessary medical care because they can't afford it, which leads to worse health outcomes and higher costs down the road. Medical debt piles up and takes months to appear on credit reports, creating a delayed financial crisis.
And here's the cruelest part: The people who can least afford to lose coverage are often the first to lose it.
Healthcare is supposed to be a safety net. Instead, for too many people, it's a trapdoor.
What Should Be Done? (The Big Picture)
I'm not a policy expert, but I've worked with enough people over almost 30 years to know what's needed:
Coverage needs to be:
→ Affordable on a range of incomes
→ Comprehensive enough to actually cover medical needs
→ Accessible regardless of employment status
→ Simple to understand and use
Possible paths forward include:
→ Expanding Medicaid in states that haven't
→ Enhancing marketplace subsidies
→ Allowing more people with unaffordable employer plans to access subsidized coverage
→ Banning non-compliant plans that leave people exposed to catastrophic costs
→ Creating auto-enrollment mechanisms
→ Or, more comprehensively, moving to a single-payer system that guarantees coverage for all
I'm not here to tell you which policy is "right." But I am here to say: The status quo is not working.
People are going bankrupt. People are avoiding necessary medical care. People are stuck in jobs they hate because they can't risk losing insurance.
This is not a functioning system.
What You Can Control Right Now
While we wait for systemic change (which may or may not come), here's what you can do:
Understand your coverage. Really understand it. Know your deductible, out-of-pocket maximum, what's covered, what's not. Ask questions.
Build a bigger emergency fund if you can. Healthcare emergencies are one of the top reasons people drain savings. If you can manage more than 3-6 months of expenses, do it.
Advocate for yourself. Question bills that seem wrong. Request itemized statements. Appeal denials. It's exhausting, but it matters.
Don't blame yourself. If you're struggling financially because of healthcare costs, that's not a personal failing. The system is broken.
Get financial support. You don't have to navigate this alone. A financial coach can help you build a plan that accounts for healthcare uncertainty and works with your reality.
Why I Do This Work
One of the reasons why I became a financial coach is because traditional financial advice doesn't acknowledge reality.
It doesn't acknowledge that healthcare costs can derail even the best plan. It doesn't acknowledge that systemic barriers make progress harder for some people than others. It doesn't acknowledge that sometimes you're doing everything "right" and still struggling.
My approach is different.
I help clients focus on what they can control while releasing shame about what they can't. I acknowledge that external factors—like inadequate health coverage—create real obstacles. And I work with people to build financial plans that are flexible enough to handle the inevitable curveballs.
Because you deserve financial guidance that honors your reality—including the broken systems you're navigating.
You're Not Alone
If you're navigating a major life change—career shift, divorce, new parenthood, caring for aging parents, health challenges—and healthcare costs are making you feel stuck financially, you're not alone.
And you don't have to figure it out by yourself.
I offer individual and group coaching programs for people who want support that acknowledges reality, not just toxic positivity. For people who are ready to take action on what they can control while releasing shame about what they can't.
If that sounds like you, book a free 15-minute clarity call and let's talk about whether working together makes sense.
Because at the end of the day, you deserve to pursue your financial goals without fear that one medical event will destroy everything you've built.
Let's work on what we can control—together.
What about you? Has healthcare cost affected your financial goals? I'd love to hear your story. Reply and let me know—I read every message.
And if this resonated, please share it with someone who needs to hear it.
~ Kimberly