Jul 21, 2022 - News

Low credit Texans feel impact of higher health care costs

Illustration of a red cross-shaped balloon inflating and then popping.
Illustration: Brendan Lynch/Axios

Texans with credit scores below 700 have felt the impacts of inflation more dramatically than their neighbors with better credit.

  • This is especially true when it comes to health care costs, analysts from the Center for the New Middle Class (CNMC), a Fort Worth-based financial firm that researches behaviors of the middle class, tell Axios.

Why it matters: About 45% of Texans had a credit score under 680 in 2018, the latest year available, per the Dallas Fed — though that percentage is likely higher now after several years of global economic instability.

  • Analysts have dubbed these people "non-prime" consumers.

What they did: CNMC researchers asked non-prime consumers to report how much strain — a lot, a little or no strain — various household costs are causing on their month-to-month finances.

  • The center collects survey data twice per month on an ongoing basis.

What they found: The number of non-prime consumers who said they felt less financially secure overall compared to the prior year grew throughout 2019 and peaked in the shutdown in 2020 — but then it dropped in 2021.

  • The latest data suggest that insecurity is climbing again.
  • Researchers saw a 10 percentage-point increase in the number of non-prime households who are experiencing "a lot" of strain due to health care costs, which includes both the price of insurance and out-of-pocket expenses.
  • Groceries, utilities, entertainment and gas also ranked high on that list.

Yes, but: People with better credit scores were more likely to report that housing costs caused "a lot" of strain.

The irony: Many non-prime Texans were deemed "essential" during early stages of the pandemic, which meant those families were more likely to be exposed to COVID-19 before vaccines were available.

  • Now those same households are also less likely to benefit from the country's financial recovery.

Go deeper: Read Rachel Monroe's New Yorker story about the cost of inflation in small-town Texas.

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