Give Smart Blog

A Nationwide Problem

In April, a new report from the Consumer Financial Protection Bureau “Medical Debt Burden in the United States” was issued, which elevates medical debt as a larger problem nationwide. Some findings from the report:

• The Consumer Financial Protection Bureaus research shows $88 billion in medical debt on consumer credit records as of June 2021. The total amount of medical debt in collections in the U.S. is likely higher, since not all medical debts in collections are furnished to consumer reporting companies.

• Most medical debt on consumer credit reports are under $500.

• Past-due medical debt reported to consumer reporting companies can appear on a person’s credit reports and lower their credit scores. This may reduce their access to credit and make it harder to find a home or a job.

• Medical debt collections are less predictive of future payment problems than other debt collections are. Certain newer credit models take this into account, but some widely-used models still weight medical and nonmedical collections equally.

• Black and Hispanic people, and young adults and low-income individuals of all races and ethnicities, are more likely to have medical debt than the national average. As a result, these populations may be more heavily impacted by outdated credit models that overestimate the predictiveness of medical debt. Older adults and veterans are also heavily impacted by
medical debt. Additionally, medical debt is more prevalent in the Southeastern and Southwestern U.S.

• Medical bill amounts can be unpredictable and often vary widely based on patient and provider characteristics. Uninsured and out-of-network patients are often charged prices that are much higher than what in-network insurers pay — even though the uninsured may have little ability to pay. The prices charged to uninsured and out-of-network patients
sometimes significantly exceed providers’ costs. Markups are especially high for emergency care, and for-profit investor-owned hospitals charge higher average markups.