This article discusses the meaningful impact of medical debt on individuals’ financial security and future planning, notably considering a recent decision by the Financial Protection Bureau that would remove medical bills from credit reports.
Hear’s a breakdown of the key points:
Public Worry about Healthcare Costs: A KFF Health Tracking Poll reveals that a majority of adults (62%) are worried about affording healthcare services, and 61% are concerned about unexpected medical bills. These concerns are higher than those related to other essential expenses like rent, utilities, food, and transportation.
long-Term Financial Impacts of Medical Debt: A KFF Health Care Debt Survey from 2022 found that medical debt has lasting financial consequences. The survey estimated that about 41% of adults have some form of healthcare-related debt from medical and dental bills. Of those with healthcare debt,26% had bills that were past due or unpaid.
disproportionate Impact on Credit Scores: more than a third of adults with healthcare debt reported that it negatively affected their credit score. This impact is even higher for Black adults (46%) and those who incurred debt while uninsured (40%).
Cascading Effects of Damaged Credit: The article highlights how a low credit score due to medical debt can lead to severe consequences,such as difficulty qualifying for loans and even job loss due to lack of transportation. An example is given of a woman whose low credit score prevented her from getting financing for a vehicle, leading to her job loss.
Unforeseen Events Drive Medical debt: Contrary to the idea that medical debt is primarily linked to chronic illnesses, the survey found that about 72% of adults with healthcare debt incurred it due to one-time or short-term medical expenses, like a single hospital stay or accident treatment. This underscores how easily unexpected health events can lead to financial hardship.
Broader Financial Repercussions: The article concludes by suggesting that the recent decision regarding medical bills on credit reports,combined with new tax legislation and the expiration of ACA premium tax credits,could lead to long-lasting financial repercussions for millions of Americans. Rising healthcare costs, if paid with debt, are likely to substantially impact consumer credit scores in the future.
