The Consumer Financial Protection Bureau has issued a report drawing attention to consumer financial issues in medical billing, marking it as the latest area of focus for the agency.
The bureau estimated that $88 billion in medical bills appears on credit reports, affecting about 20 percent of American households. As of second quarter 2021, 58 percent of bills in collections and on people’s credit records are medical bills, according to CFPB analysis.“The U.S. healthcare system is supported by a billing, payments, collections, and credit reporting infrastructure where mistakes are common, and where patients often have difficulty getting these errors corrected or resolved,” the CFPB said. The bureau also highlighted the racial disparity in medical debt: Past-due medical debt is more prevalent among Black (28 percent) and Hispanic (22 percent) individuals than white (17 percent) and Asian (10 percent) individuals.
The Covid-19 pandemic has exacerbated the issue, the bureau said, and internal research shows that medical billing data on a credit report is less predictive of future repayment than reporting on traditional credit obligations.
The CFPB said it wants to prevent the consumer credit reporting system from coercing patients and their families into paying “questionable” medical bills. It vowed to hold credit reporting companies accountable, work with federal partners to reduce coercive credit reporting, and determine whether unpaid medical billing data should be included in credit reports.
“When it comes to medical bills, Americans are often caught in a doom loop between their medical provider and insurance company,” said CFPB Director Rohit Chopra. “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.”
Recently, the bureau has signaled it would focus on anti-discrimination requirements for appraisers, the criminal justice financial ecosystem, the Public Service Loan Forgiveness program, and junk fees.