From 2020 to 2022, the number of those who had some form of medical debt on their credit report dropped by 17.9%. That’s about 8.2 million individuals, according to the U.S. Consumer Financial Protection Bureau’s report. For people in California dealing with medical debt, this could be great news.
New policies have successfully driven down debt
This decline in medical debt is likely a result of policy change, say White House officials. One healthcare law from the Obama administration that was later expanded has helped to get 4.2 million new people set up with some health insurance.
The Consumer Financial Protection Bureau has been persistent in its attempts to help mitigate the medical debt problem. In 2022, it was announced by major credit rating agencies that certain medical debts wouldn’t be included in their report. This applies to any debt less than $500 or ones that have already been paid off.
In addition, these agencies will give more time before medical debts have to be included in their reports. Previously, any medical debt would be added to a report in six months, but now people will have a full year. This might give families the time they need to pay back the money and not worry about the penalty of a damaged credit score or bankruptcy.
Less debt means better healthcare
The hope from White House officials is that with fewer people afraid of how much they owe in medical bills there will be fewer cases of missed appointments and unfilled prescriptions. And there is cause to be hopeful because, unlike other economic measures like inflation and the unemployment rate, medical debt decline has held steady.
At the same time, it should be noted that over half of all debt that’s in collections is still comprised of unpaid medical bills. This form of debt is greater than personal loans, utilities, phone bills and credit cards combined.