About 42.9 million U.S. residents have outstanding medical debt, according to a Consumer Financial Protection Bureau (CFPB) report.
The report found that:
- An individual with overdue medical debt owes $1,766 on average;
- Medical expenses comprise more than half of debt on credit reports; and
- Half of consumers with debt from medical expenses showed no other signs of financial distress.
Helping providers talk about patients' financial obligations
The report suggested that confusing billing notifications from hospitals and insurers could be one reason many U.S. residents have medical debt. Specifically, the authors said that it often is difficult to tell from insurance and hospital statements how much is owed, the payment deadlines, and which organization to pay.
Noting that consumers tend to dispute transactions when they are confused, CFPB on Thursday announced plans to require major consumer reporting agencies to report regularly about their methods for responding to and investigating disputed charges.
Some firms have already updated their credit score models to address the fallout from unpaid medical bills. For example, Fair Isaac in August lowered the weight it put in medical bills when predicting likelihood of repayment (AP/Modern Healthcare, 12/11 [subscription required]).
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Around the nation: Dec. 15, 2014