U.S. Government Recognizes the Burden of Medical Debt

The impact of crushing medical debt on millions of Americans is finally getting serious notice from the Federal government. A recent proposal being considered by the Consumer Financial Protection Bureau is suggesting that unpaid medical bills would no longer show up as “debt” on credit reports.? The agency expects to issue a proposed rule by next year.

If the rule is finalized, consumer credit companies would be barred from including medical debt?and collection information on reports that creditors use to make underwriting decisions. Medical debt has lowered people’s credit scores, affecting their ability to buy a home, get a mortgage or own a small business. If the proposal passes, creditors would only be able consider non-medical information when evaluating borrowers’ loan applications.

“Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” said CFPB Director Rohit Chopra. “When someone gets sick, they should be able to focus on getting better.”

Roughly 20% of Americans reported having medical debt, according to a 2022 report from the Bureau. Chopra went on to stress that many health care bills contain mistakes. “Families are often barraged with a string of confusing and error-ridden bills. These bills, even ones where the patient doesn’t owe anything further, can end up being reported on the patient’s credit report.”

Becoming a Global Problem

Though the U.S. leads the world in medical debt, this problem is becoming a global one. A recent poll published by Compare the Market found that the average Canadian held $8,214 in debt due to healthcare costs, largely as a result of dental care and prescription medication. In comparison, Australians had an average healthcare debt of $2,839, while the U.S. came in with the highest level of debt, averaging $12,765 per person in Canadian currency. In the UK, even with their single-payer system, medical bankruptcy is becoming more prevalent.

One must always consider that medical bankruptcy doesn’t always happen due to medical bills alone — serious medical conditions often affect people’s ability to work and generate income. Not just an inability to pay medical bills.

One Key Solution: Cost Containment

As healthcare costs continue to rise across the globe, many employers, insurance carriers and assistance companies are looking to cost containment specialists, like Epic Health Solutions , to help prevent individuals from falling victim to grievous medical debt. Please contact us for more information.

Sources: CNN September 21, 2023, “Biden administration seeks to remove medical bills from credit reports.” https://balancingeverything.com/medical-bankruptcies-statistics/ May 5, 2023; True North, “ Canadians have nearly 300% more healthcare debt than Australians,” May 28, 2023