So am I but the OP has said it's not really about the money in this case. There aren't many people who can suck up a nearly £10k deficit without batting an eye even if they can afford £25k holidays. When you have health issues on your mind, mistakes you have made and seeming unfairness from others all cause distress whoever you are. This forum has an extremely wide range of people and experience on it, so it is almost certainly the best place for this sort of query.

I would have expected BAH to make some effort at service recovery, but as others have said, once the deposit wasn't paid, the reservation will automatically be cancelled and would need to be rebooked, you would be asking BA to eat the loss in rebooking to what are now more expensive tickets. Even so I would have expected them to do it as a gesture of goodwill in most cases given you have medical evidence.
An obvious lesson to others is not to wait until the very last minute to pay the balance of a BA Holiday booking, because it is unlikely your travel insurance will cover you until you do, at best it will likely only cover you for the deposit.