April 30, 2024 — Press Release

15 Million Americans with Medical Debt on Credit Reports Disproportionately Live in the South and in Low-income Communities

WASHINGTON – A study released by the Consumer Financial Protection Bureau (CFPB) yesterday shows that, despite changes by Equifax, Experian, and TransUnion to reduce the number of medical bills on credit reports, 15 million Americans still have more than $49 billion in outstanding medical bills in collections on their credit reports. The population with medical collections remaining on their credit reports is more likely to live in predominantly Black and Hispanic census tracts. 

“The CFPB’s report confirms what we’ve always known,” stated Berneta Haynes, senior attorney at the National Consumer Law Center and author of The Racial Health and Wealth Gap: Impact of Medical Debt on Black Families. “The burden of medical debt disproportionately falls on Black and Latino families.”

In March 2022, Equifax, Experian, and TransUnion announced they would no longer report certain medical bills, including paid medical debt and bills under $500. Today’s research found the number of people with medical bills in collections on their credit reports has declined, but that the credit reporting changes were slightly less likely to help Americans in lower-income communities. Consumers living in the South continue to have the most medical bills in collections and for the largest dollar amounts.

“While the voluntary changes by the credit bureaus in the past few years were helpful to some groups, they were less helpful to more vulnerable communities,” said Chi Chi Wu, senior attorney at NCLC. “The consumers who have medical debt remaining on their credit reports don’t just face a financial burden. Medical debt on credit reports can also restrict their access to affordable credit, rental housing, and even employment.”

The report found that the credit reporting changes primarily removed smaller balances, providing little relief for those who needed it the most, and increasing the average balance of the remaining reported medical bills. A majority of medical collections balances also remain on credit reports.

The report also highlighted that consumers aged 62 and older were the most likely to benefit from these credit reporting changes. The percent of seniors with medical collection tradelines fell from 8.4 percent to 2.7 percent – likely due to the removal of small-balance Medicare co-pays from credit reports. 

“Although progress has been made, medical debt credit reporting continues to have a significant impact on older adults, particularly older adults of color, who are twice as likely to have medical debt,” said Anna Anderson, staff attorney at NCLC. “Older adults are at high risk of receiving inaccurate medical bills that land on their credit reports because they are more likely to live with chronic conditions, have multiple insurance plans, and experience difficulty navigating complex billing systems to correct inaccurate bills.”

Today’s report follows the start of a CFPB rulemaking that will consider options to restrict the reporting of allegedly unpaid medical bills on credit reports. The CFPB vows to prioritize fixing the credit reporting market, including issues that involve the reporting of medical bills.

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