The report was based on a nationally representative survey of 2,375 adults taken between Feb. 25 to March 20 and included 1,292 adults with current health-care debt. (The results were weighted to reflect the U.S. population.) The study was conducted as part of a larger research project with Kaiser Health News and NPR.
Changes are coming for medical debt on credit reports
The study comes ahead of scheduled changes to the way medical debt shows up on consumer credit reports. As of July 1, if such debt shows up on your history because it went to collections but you’ve since paid it off, the three big credit-reporting companies — Equifax, Experian and TransUnion — will stop including it on your report. Under current practice, it can remain on your record for seven years.
Research has shown that medical debt is less predictive of a person’s ability to keep up with payments than other types of collection accounts.
Health-care debt hurts consumer spending
Yet the financial consequences of medical debt go beyond credit scores, the Kaiser survey shows. For instance, 63% with current or recent debt (within the past five years) said it caused them to cut spending on food, clothing and other basics — including 51% of those with annual household income above $90,000. Nearly half (48%) with such debt said they used up all or most of their savings to pay it off.
Collectively, medical debt in the U.S. stood at $195 billion or more in 2019, according to Kaiser research.
Capitol Hill acts against billing surprises
One thing that could help prevent consumers from facing outsized bills — at least in some situations — is a federal law that took effect this year.
Historically, one of the biggest causes of unexpected large medical bills was out-of-network providers being involved in your care without you realizing it. Then the bill would come and you’d discover that your insurance didn’t fully cover those charges, if at all.
The No Surprises Act aims to minimize that happening, although consumers should still watch for such charges due to billing mistakes.
There’s also a hospital price transparency rule that’s been in effect since 2021 that’s intended to help consumers. It essentially requires hospitals to post online, in a consumer-friendly format, the rates they’ve negotiated with insurers for 300 common medical services.
The idea is that if you’re able to plan ahead, you can compare hospital prices. However, just 14.3% of hospitals were in full compliance with the law as of February, according to PatientRightsAdvocate.org, which reviewed 1,000 of the 6,000-plus accredited hospitals in the U.S.
