CFPB: Medical Bills Plague Lower-Income Americans
New government data shows 15 million Americans still have medical bills on their credit reports. That’s according to the Consumer Financial Protection Bureau (CFPB), which notes that these bills remain in spite of changes by the three major credit bureaus. Collectively, these Americans have more than $49 billion in outstanding medical bills in collections, the bureau said Monday (April […]
The post CFPB: Medical Bills Plague Lower-Income Americans appeared first on PYMNTS.com.
New government data shows 15 million Americans still have medical bills on their credit reports.
That’s according to the Consumer Financial Protection Bureau (CFPB), which notes that these bills remain in spite of changes by the three major credit bureaus. Collectively, these Americans have more than $49 billion in outstanding medical bills in collections, the bureau said Monday (April 29).
“Experian, Equifax, and TransUnion took steps to remove many medical bills in part because of the recognition that they hold little predictive value,” said CFPB Director Rohit Chopra. “Findings from our latest research reveal the impact of these changes and the need for further reforms.”
In March 2022, a study by the CFPB found an estimated $88 billion in medical bills on Americans’ credit reports. In the wake of that study, the credit bureaus announced they would no longer report certain medical bills in collections.
The companies said they would increase the time before medical bills in collections can appear on credit reports — from six months to one year. In addition, the credit bureaus said they would cease reporting medical bills that had been in collections but were resolved and would remove medical bills of less than $500 from credit reports.
And while the number of Americans with medical bills in collections on their credit reports has declined, the CFPB says its research shows there is work to do.
“The credit reporting changes were slightly less likely to help Americans in lower-income communities compared to those in higher-income communities,” the agency said. “The changes did not do as much for individuals residing in the South. On average, people living in the South continue to have the most medical bills in collections and for the largest dollar amounts.”
PYMNTS has contacted Experian, TransUnion and Equifax for comment but has not yet gotten a reply.
According to the CFPB, the average medical balance on credit reports rose from $2,000 to over $3,100. As the changes primarily removed smaller balances, the average balance of the remaining reported medical bills increased. And most medical collections balances are still on credit reports.
“The three national credit reporting companies removed many bills, and many people now have no remaining medical bills on their credit reports,” the release said. “However, a majority of medical collections balances remain on credit reports.”
The findings come as unexpected medical bills continue to serve as the most common unanticipated expense for consumers, costing an average of about $6,200 according to recent research by PYMNTS Intelligence.
“Our study found that credit-marginalized consumers — those who have been rejected for at least one credit product in the past year — are 47% more likely than the average consumer to face unexpected expenses,” PYMNTS wrote earlier this month. “And, because of their credit-challenged status, they are more than twice as likely to turn to high-interest credit products to cover emergency costs.”
The post CFPB: Medical Bills Plague Lower-Income Americans appeared first on PYMNTS.com.