General Electric (GE) revealed they are actively shopping the healthcare financing arm of their massive GE Capital division. Financial house Goldman Sachs (GS) will be handling the sale, which is rumored to approach $2 billion in value.
As GE reportedly continues to downsize and spin off pieces of GE Capital, the future of healthcare financing looks dire. GE launched their CareCredit program back in 1987, as a way for uninsured people to use a credit card to pay off medical expenses.
But GE was long criticized for the high interest rates the cards would charge, especially considering the card users were largely poor. In June GE settled with the New York attorney general’s office for nearly $2 million concerning complaints about the cards, citing the disproportionate targeting of the elderly and poor, rushed doctor’s office application process, and an interest rate as high as 26.99 percent.
Citi (C), another company actively engaged in medical credit cards with their Citi Health Card, charges an even higher rate of interest at 28.99 percent. Usury rates in New York are capped at 25 percent.
As public access to healthcare continues to improve, the the future of healthcare credit cards becomes more uncertain. The Affordable Care Act, barring any successful challenges in the House, is six months away from total implementation. As the ACA will require every individual be insured, and healthcare credit cards are used primarily by the uninsured, the need for private, high-interest healthcare financing could soon become totally obsolete.
GE is down .16 percent to 23.27. Their stock is up 8.3 on the year.
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