Addressing medical debt

Millions of Americans have medical debt. KFF Health News reports that "More than 100 million people in America — a startling 41% of adults — are saddled with medical bills they cannot pay," while Health System Tracker (a collaboration that involves KFF) says that "20 million people (nearly 1 in 12 adults) owe medical debt." Regardless of the actual number, the issue seems common enough that KFF Health News published a piece outlining some of the efforts that the Consumer Financial Protection Bureau is taking to address the issue. Among them, "In the past two years, the CFPB has penalized medical debt collectors, issued stern warnings to health care providers and lenders that target patients, and published reams of reports on how the health care system is undermining the financial security of Americans."

As another step, the federal agency is reported as trying to prevent medical debt from appearing on consumer credit reports. An interesting argument is that "the agency found that medical debt is typically a poor predictor of whether someone is likely to pay off other bills and loans." The original intention of credit reports was to help lenders assess whether an individual is likely to repay loans, so if medical debt is a poor predictor, then it appears less relevant to one's credit report than other factors.

Perhaps an even stronger argument is the sheer volume of mistakes in medical billing "Medical debts on credit reports are also frequently riddled with errors, according to CFPB analyses of consumer complaints, which the agency found most often cite issues with bills that are the wrong amount, have already been paid, or should be billed to someone else." Medical bills can be difficult to understand, expensive, and correcting them can take patients an inordinate amount of time. With that in mind, perhaps unpaid medical debt should be treated differently from other types of debt.