At the core of every family’s fears is the thought of someone getting sick. It’s hard enough to experience the emotional toll of caring for a sick loved one – but our broken healthcare system imposes a harsh financial toll as well. A single unexpected trip to the hospital can saddle patients with crushing medical debts as they navigate confusing reimbursements, opaque billing, and exorbitant pricing.
In March, the Consumer Financial Protection Bureau (CFPB) estimated that $88 billion in medical bills is on 43 million individuals’ credit reports – nearly 20% of U.S. households. And most people with medical debt had health insurance. Any medical debt that shows up in an individual’s credit file can be factored into their credit score, leaving a potentially devastating impact on a patient’s financial health, limiting access to housing and credit, restricting employment opportunities, and increasing auto insurance rates. A survey conducted by the American Journal of Public Health from 2013 to 2016 found that medical debts were leading causes of personal bankruptcy. Medical debt can cause our already weak social safety net to completely unravel.
Last week, the “big three” credit reporting agencies – Equifax, TransUnion and Experian – announced that they would begin implementing changes to how medical debt collections are reported. These changes include increasing the period before unpaid medical collection debt would appear on credit reports to one year and no longer including medical collection debts under $500 on reports. This is a major victory for patients and advocates who have been pressuring the predatory debt collection and credit reporting industries to protect patients instead of their bottom lines. But we need to go further.
These “Band-Aid” approaches delay the much needed comprehensive reforms that are desperately needed for communities like mine. For individuals with chronic illnesses or coping with a catastrophic accident – the very patients with the largest and most confusing medical bills – these changes won’t make a dent. No one chooses to get sick, let alone to take on medical debts that will potentially ruin their credit. The CFPB’s research has found that “medical collections are less predictive of future consumer credit than nonmedical collections.” That’s why I introduced H.R. 2537, the Consumer Protection for Medical Debt Collections Act, to prohibit all medically necessary debt from ever appearing on credit reports. I’m proud the House has passed this vital legislation, and I urge the Senate to send it to the President’s desk.
Incredibly, inaccurate medical billing data contaminates our credit reporting system with little to no way for individuals to fix it. As the CFPB has found, inaccurate, fraudulent and miscommunicated information about medical debt commonly affects an individual’s credit scores. Often, hospitals sell unpaid medical bills to third parties and, when they don’t, they enter into litigation with patients over unpaid bills. From 2015 to 2019, the median amount New York hospitals sued patients over was just $1,900. As insurance companies and healthcare providers enter into disputes over billing and reimbursements, patients are caught in the middle and their credit takes the hit.
A credit reporting system that imposes steep penalties just for getting medically necessary care simply compounds the inequities that are so prevalent in our healthcare system. A 2016 Stanford study found that 46% of individuals with medical debt avoided care, and that even among insured patients, 41% of insured people with medical bill problems did not fill a prescription in the last 12 months. Meanwhile, healthcare avoidance is already disproportionately common in our most vulnerable communities. In 2019, Kaiser Health Costs survey found that 58% of Black and Hispanic adults reported delaying or skipping at least one type of medical care in the past year due to cost. A healthcare system that actively punishes people for getting the care that they need defies logic and compassion.
It simply shouldn’t be this hard for so many in our country to have a good life. In the communities I represent, I already see how lack of access to mortgages and auto loans is holding our families back. Without a roof over your head or transportation to get to your job, imagine how hard it is to survive – let alone thrive? Poverty is generational and a cycle that is already difficult to exit. The system and usage of credit reporting is keeping people in poverty.
There’s no doubt that fixing our broken healthcare system will require more than reforms to medical debt collections and credit reporting. Thanks to the corporate greed of hospitals and insurance companies, Americans pay the most expensive healthcare prices in the world for receiving far less care than patients in comparable countries. But undergoing a medically necessary procedure should never haunt someone financially. Enacting protections against predatory medical debt and credit reporting industries is critical to ensuring patients will be able to fully recover – physically and financially.