TUESDAY, Jan. 16 (HealthDay News) -- More American families -- both with health insurance and without -- are sinking in a sea of medical debt, and are turning to their credit cards as a last-ditch lifeline to pay their bills, a new report finds.

"The health-care net is made of plastic," said Mark Rukavina, co-author of the report and executive director of The Access Project, in Boston. "People are using high-interest credit cards to pay for their health care."

The report, Borrowing to Stay Healthy: How Credit Card Debt Is Related to Medical Expenses, was prepared by The Access Project and Demos, two non-profit organizations, and released Tuesday.

Health-care costs have been rising for decades, and have risen dramatically in recent years. And the cost of health insurance continues to outstrip wages and inflation. As a result, employers are looking for ways to reduce their insurance costs, and individuals and families are being forced to take on more of the burden.

Both people with and without health insurance are struggling to pay their medical bills. According to one survey, one-quarter of Americans have problems paying medical bills and two-thirds of these people have health insurance.

"The problem of medical debt is widespread," Rukavina said. "Nearly 60 million adults in the U.S. are at risk of incurring medical bills they will not be able to afford. Many people are just an illness away from becoming medical debtors, and medical debt can have a detrimental effect on health-care access."

"I woke up every morning and the first thing I thought was, 'I have cancer,' and the second thing was, 'How am I going to pay for this?' " said Peggie Sherry, 50, a cancer survivor and founder of the Faces of Courage Foundation, a nonprofit cancer-patient support group based in Tampa, Fla.

Sherry had six surgeries in two years for breast cancer and was only able to pay off $40,000 worth of medical bills on her credit cards when her parents died and left her money.

To assess how U.S. households are dealing with medical debt, The Access Project and Demos commissioned a national survey of 1,150 low- and middle-income households. To be included in the survey, which was conducted in 2005, households had to have credit-card debt of three months or longer at the time of the survey.

People who had medical expenses as part of their credit-card balances had much higher credit-card debt than those who did not. In fact, 29 percent of households reported that medical expenses contributed to their credit-card balances. Within that group, 69 percent reported a major medical expense in the past three years.

"Medical costs were key factors in higher credit-card balances among households," said Tamara Draut, director of the Economic Opportunity Program at Demos.

Among the report's other findings:

• Households with medical debt had higher levels of credit-card debt than households without medical debt -- on average, 46 percent higher or $11,623, compared to $7,964.
• The distribution of debt was higher among medically indebted households: 44 percent had credit-card debt in excess of $10,000, while only 26 percent of non-medically indebted households had credit-card debt above $10,000.
• Among those with medical debts, young adults aged 18 to 34 had the highest level of average credit-card debt of any age group -- $13,303 compared to $7,450 for non-medically indebted young adults.
• Households that were medically indebted were more likely to be called by bill collectors than non-medically indebted households, 62 percent vs. 38 percent.
• Credit-card debt was high for both insured and uninsured medically indebted households -- $10,973 and $14,512, respectively. "This indicates that even those who do have health insurance aren't always protected," said Cindy Zeldin, a report co-author and federal affairs coordinator with Demos' Economic Opportunity Program.

The report outlined several areas for reform, including differentiating medical debt from consumer debt and limiting the entry of medical providers into financial services.

More information

View the full report at The Access Project.