News: Twenty percent of households have medical debt, totaling $88 billion

CDI Strategies - Volume 16, Issue 10

A report released by the Consumer Financial Protection Bureau (CFPB) estimates nearly $88 billion in past-due medical bills for the 2021 year. Additionally, the report found that 20% of households in the United States have medical debt.

When families are unable to pay off their medical debt, the bills are sent to debt collectors and might appear on the consumer’s credit reports. This can lead to lower credit scores, meaning consumers will have reduced access to credit making it difficult to find housing and other financial barriers.

The report found medical debt collections to appear in 43 million credit reports, and as of second quarter 2021, more than half of debt collection tradelines were for medical debt. Most of the tradelines were under $500, yet a handful of credit reports had more than one tradeline listed.

“When it comes to medical bills, Americans are often caught in a doom loop between their medical provider and insurance company,” the report stated. “Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.”

Because medical debt frequently comes from emergency events, patients often don’t have the time to understand cost of care before receiving treatment.

The report notes that not all medical debt ends up in hands of consumer reporting companies, so the total national medical debt in collections is likely more than the found $88 billion.

Editor’s note: The CFPB report can be found here.

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