Medical debt is causing big problems for huge numbers of consumers. The New York Time reports that medical providers and their debt colletors are unfairly hitting consumers with reports to the credit bureaus they have have not paid medical debts.
One seemingly simple medical procedure may result in an avalanche of bills from hospitals, insurance companies and doctors. The bills themselves are often confusing as to what the consumer is supposed to pay and how long the consumer has to pay. Some medical providers charge huge amounts for simple procedures. Hospitals routinely overcharge for items like aspirin and supplies. Consumer are often not told in advance of obtaining treatment how much it will cost.
When an insurance company is slow to pay, the provider often bills the consumer. When the consumer wrongly assumes the insurance company will pay the bill, the provider may send the bill to a debt collector. The debt collector may promptly report the debt to Experian, Equifax and Trans Union knowing such reports are levers to exact payment.
A Texas mortgage initiator in Texaslooked at the credit records of 5,000 applicants and found that 40 percent had medical debt in collection, with the average around $400. Many applicants did not know about the debt.
Richard Cordray, director of the federal Consumer Financial Protection Bureau, has noted that half of all accounts reported by collection agencies now come from medical bills, and the credit record of one in five Americans is affected.
Just one medical bill reported to a credit agency may become a “millstone around your neck” said Mark Rukavina, principal at Community Health Advisors, a health care advisory service. He said mortgage brokers have told him ‘I have these people with great credit. They’ve refinanced before, but now they’ve got this medical bill and even though they’ve paid it off, I can’t get them a good rate.’
The NY Times article points out the problem is greater worse. Insurance policies are requiring more patient payments of deductibles and co-payments. Many doctors work for large groups and hospital systems whose bills are generated by computer.
Consumer groups say legislation to needed to curb these unfair practices.