In a study released by the Consumer Financial Protection Bureau (CFPB), analysts found that medical debt is becoming increasingly harmful to consumers – and many are ending up in a long-term debt cycle that’s incredibly difficult to break.
The study found that approximately 43 million Americans now have medical debt listed on their medical reports and that these debts were for nearly $88 billion in total.
The CFPB noted that this can have other impacts on people’s lives, such as dealing with a lower credit score and dealing with aggressive debt collection agencies trying to collect payments.
Once a medical debt is added to someone’s credit score, the effects can be long-lasting and, in some cases, devastating as it can limit their ability to get credit, buy or rent a home, or get a job.
The CFPB stated in its report: “These practices can impose serious costs on people’s financial, physical, and emotional health. Having a medical debt collection tradeline on a person’s credit record can make it harder to get credit, rent or buy a home, or find a job.”
“Some people are pushed into bankruptcy by medical bills that they cannot pay. Some avoid seeking health care out of fear of medical debt.”
“And some find that the stress of having medical debt—and being contacted by medical debt collectors – worsens their mental health, contributing to conditions like anxiety, depression, and even suicide.”
How can the situation be improved?
Medical debt is usually caused by unexpected or emergency events, as well as a lack of consistency with the costs of medical treatment and what’s covered by insurance.
A number of states have already promised to take action to protect patients. They plan to introduce new state laws that limit healthcare providers and collections agencies to do this.
However, the CFPB says it plans to take further action and step up its efforts to make sure the use of consumer credit reporting is restricted when it comes to medical debts.
The agency says it wants to ensure there are reasonable practices in place so credit reporting isn’t used to force patients and their families to pay unaffordable medical bills. It will also make sure patients aren’t coerced into paying unreasonable fees and charges on top of their debts.