AARP Eye Center
Background
Medical debt is a widespread problem. Roughly one-fifth of households report having medical debt, according to a report from the Consumer Financial Protection Bureau (CFPB). That report also found that consumers carried more than $88 billion in medical debt on their credit reports in 2021, and that 58 percent of debt in collections on credit reports was due to medical debt. Medical debt on credit reports can lower credit scores and impair people's ability to obtain loans, employment, housing, and insurance. This is the case even though medical billing data on a credit report is less predictive of future repayment than traditional credit obligations.
Although medical debt is a problem for people of all ages, adults age 50 and older are particularly affected, as they are more likely to need expensive medical treatments. More than 44 percent of people age 50 to 64, and 22 percent of people age 65 and older, carry medical debt.
Medical debt also disproportionately affects rural residents, according to the CFPB. For example, rural Appalachians and rural southerners are more likely to have reported medical debt collections than the rest of the country. Compared with older adults living in nonrural areas, older adults living in rural areas are particularly vulnerable to the negative impacts of medical debt. They tend to live near fewer healthcare providers and hospitals. They are also less likely to have comprehensive health insurance. And they are more likely to be in poor health and to live in poverty.
In addition, Black and Hispanic Americans are more likely to have medical debt than white Americans, even after controlling for factors such as income and insurance status.
MEDICAL DEBT: Policy
MEDICAL DEBT: Policy
Medical debt protections
Policy and the private sector should protect consumers from acquiring and carrying unreasonable levels of medical debt by adopting policies and practices, such as:
- providing access to affordable and comprehensive health insurance (see also AARP Health Principles);
- providing free or discounted care for those who are uninsured or underinsured (see also Uncompensated Care);
- protecting consumers from unfair, deceptive, or abusive practices related to medical debt collection, credit reporting, and debt selling (see also Debt Collection Practices);
- ensuring reasonable fees and interest for all medical debts (see also AARP Financial Services Principles); and
- providing relief to individuals who are carrying unreasonable medical debt.
Creditors and debt collectors should be prohibited from engaging in any debt collection activities, credit reporting, or selling of medical debt when the patient:
- has insurance coverage that is under review, pending appeal, or actively in dispute resolution;
- qualifies for free or reduced-price care with the hospital or medical provider; or
- otherwise qualified for assistance.
Medical debt should be excluded from credit reports (see also Credit Reports and Scores). Consumers should have the right to a fair appeal process to address complaints and grievances.
Policymakers and private sector efforts to erase medical debt should purchase this debt at deeply discounted rates and, ideally, be paired with increased efforts to prevent medical debt (i.e., policies that increase transparency and accountability in health care provider billing practices) to discourage providers from continuing the practices of billing exorbitant rates for people who are uninsured (see also Uncompensated Care).