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For many adults, health care debt is part of their balance sheet – it may simply manifest itself in a different way than expected, new research shows.
Overall, about 41% of people – or about 100 million adults – currently face such debt, ranging from less than $ 500 (16%) to $ 10,000 or more (12%), according to a report by the Kaiser Family Foundation. Using $ 2,500 as a distinction, 56% of medical and / or dental debts owe less than that amount, and 44% owe as much or more.
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However, some of them may not have appeared in past assessments or studies aimed at capturing medical debt assessments. For example, some have credit cards (17% of adults pay this way) or are paid over time directly to a doctor, hospital or other healthcare provider (21%).
“This shows how much the health care bills have an impact on people,” said Liz Hamel, vice president and director of the foundation’s opinion poll and research.
The report is based on a nationally representative survey of 2,375 adults from February 25 to March 20 and includes 1,292 adults with current health 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 to the medical debt in the credit reports are forthcoming
The results of the study come before the planned changes on when the medical debt will appear in the consumer credit reports. From July 1, if such a debt appears in your history because it has gone into collection but you have repaid it since then, the three major credit reporting companies – Equifax, Experian and TransUnion – will stop including it in your report. In current practice, it can remain on your record for seven years.
In addition, consumers will receive one year compared to six months before the outstanding medical debt appears in the credit reports after going to a collection agency. And in the first half of 2023, credit bureaus will stop including anything less than $ 500.
Credit scores may improve for consumers affected by the forthcoming changes – which could lead to access to credit or loans at a more favorable interest rate than they would otherwise receive.
“This can have a significant impact on the people affected by it,” Hamel said.
Research shows that medical debt is less predictive of a person’s ability to handle payments than other types of collection bills.
Healthcare debt is detrimental to consumer spending
Still, the financial implications of medical debt outweigh credit scores, according to a Kaiser study. For example, 63% of current or recent debt (over the past five years) said it has reduced spending on food, clothing and other basic things – including 51% of those with an annual household income of more than $ 90,000. Nearly half (48%) of such debt say they have spent all or most of their savings to pay it off.
The total medical debt in the United States will amount to 195 billion dollars or more in 2019, according to a study by Kaiser.
Capitol Hill works against billing surprises
One thing that could help prevent consumers from facing huge bills – at least in some situations – is a federal law that came into force this year.
Historically, one of the biggest reasons for unexpectedly large medical bills is for out-of-network providers to participate in your care without realizing it. Then the bill will come and you will find that your insurance does not fully cover these fees, if at all.
The idea is that if you can plan ahead, you can compare prices between hospitals. However, only 14.3% of hospitals were in full compliance with the law in February, according to PatientRightsAdvocate.org, which surveyed 1,000 of more than 6,000 accredited hospitals in the United States.
The Medicare and Medicaid Service Centers recently released their first enforcement actions for non-compliance, fining two hospitals in Georgia.