Report Examines Medical Debt in Collections During the Pandemic

Medical debt has continued to decline during the pandemic, a trend the Urban Institute examines as changes in medical debt credit reporting by the national consumer reporting agencies will start July 1.

6/1/2022 12:30 P.M.

4 minute read

A recent report from the Urban Institute found the share of adults with medical debt in collections was already on a downward trend before the pandemic, and the reduction continued at a faster pace since February 2020.

In the report, the Urban Institute “examines the prevalence of medical debt and provides the first national estimates of changes in the share of adults with medical debt following the onset of the COVID-19 pandemic.”

The report is based on data from the Urban Institute’s Health Reform Monitoring Survey and a nationally representative panel of deidentified, consumer-level records from a major credit bureau.

Key findings include:

  • “After holding steady in the years before the pandemic, the shares of adults with medical debt, problems paying medical bills, and medical debt in collections have declined since the pandemic began. Between March 2019 and April 2021, the share of nonelderly adults reporting medical debt declined from 23.6 to 16.8% and the share reporting problems paying family medical bills in the past 12 months fell from 17 to 12.2%. The share of adults with credit records who have medical debt in collections fell from 15.3% in February 2020 to 13.9% in August 2021.”
  • “The share of adults with medical debt in collections is highest among those ages 25 to 34, at 18% in August 2021. Adults ages 65 and older were the least likely to have medical debt in collections (7.8%), followed by adults ages 18 to 24 (11.2%). Adults in all age ranges have experienced reductions in both self-reported medical debt and medical debt in collections since the pandemic began.”
  • “Though medical debt declined across racial and ethnic groups, inequities persisted in 2021. Black adults continued to report the highest rate of medical debt in April 2021, at 22.5%, compared with 19.9% of Hispanic/Latinx adults and 15.5% of white adults. The share of adults with medical debt in collections in August 2021 was highest in majority-Black communities (22.7%), followed by majority-American Indian/Alaska Native communities (17.7%) and majority-Hispanic/Latinx communities (16%). Majority-white communities had the lowest share of adults with medical debt in collections (12.6%).”

The Urban Institute reports that the drop in medical debt and consumers’ issues paying medical bills during the pandemic could be because of a decline in “health care use resulting from efforts to prevent coronavirus exposure, growth in Medicaid enrollment that protected many people from the cost of high medical bills and pandemic relief measures that provided temporary financial assistance to households.”

This trend may reverse when health care use returns to levels before the pandemic and federal legislation changes that have contributed to Medicaid enrollment growth end, according to the report.

It also includes Consumer Financial Protection Bureau findings on medical debt credit reporting, including that medical debt accounts for more than half of all debt in collections on consumer credit records over the past several years, totaling up to $140 billion in 2020.

“Currently, medical debt in collections that providers, collection agencies, or debt buyers report to the national credit reporting agencies typically shows up on credit reports after it is 180 days past due and can remain on them for up to seven years,” according to the report.

It notes, however, that the three nationwide credit reporting agencies (CRAs)— Equifax, Experian and TransUnion—announced that effective March 30, 2023, they will no longer include medical debt under $500 at the time of furnishing on credit reports. On July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports. In addition, the time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year.

ACA’s Take:

Since the beginning of the year, medical debt has increasingly been the subject of federal policies and research reports, as well as reforms by the White House, ACA International previously reported for members.

Attention grew after the CRAs announced changes to medical debt credit reporting.

ACA outlined concerns to the CRAs about their changes to medical debt credit reporting in a letter only otherwise made available to members. The letter discusses the unexpected consequences of the CRAs’ actions and potential consumer harm, including that changing the time period for reporting from six months to one year will cause consumers to miss insurance deadlines, and how these actions work against the premise of getting payors to pay their contractually-owed amounts.

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.

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