WASHINGTON – The number of people with medical debt on their credit reports fell by 8.2 million — or 17.9% — between 2020 and 2022, according to a Tuesday report by the US Consumer Financial Protection Bureau.
White House officials said in a separate draft report that the two-year drop was likely due to their policies. Among the programs she said helped reduce debt was an expansion of the Obama-era health care law that gave 4.2 million people some form of health insurance. Also, local governments are putting in $16 million Coronavirus Relief Funds to pay off $1.5 billion worth of medical debt.
The CFPB has also made persistent efforts to reduce sickness debt. That’s what the big rating agencies said last year that they will no longer include medical debts under $500 or debts that have already been repaid in their reports. The agencies will also increase the time it takes to add medical debt to reports from six months to a year, potentially giving families more time to repay before being penalized with lower loan scores.
White House officials said the fall in debt could ease fears over medical bills, which could prevent people from making necessary doctor’s appointments and filling pharmaceutical prescriptions.
White House press secretary Karine Jean-Pierre told reporters at Tuesday’s briefing that Biden’s policies play “a critical role in reducing the medical debt burden for millions of American families.”
While economic metrics like the unemployment rate and inflation can fluctuate up and down, the decline in medical debt shows steady progress is being made. About 13.5% of the 279 million people with credit reports had at least one medical debt, up from 16.4% in 2020 and 19.4% in 2014.
Still, unpaid medical bills account for more than half of all debt collections, according to the White House report. As a result, medical debt exceeds credit cards, personal loans and utilities, and phone bills combined.
There is also evidence that the decline predates the Biden presidency. According to a March 2022 report by the CFPB, medical debt on credit reports fell from $143 billion between 2018 and the first half of 2021 to $111 billion.
But communities like Chicago, New Orleans, Pittsburgh and Toledo, Ohio are using $16 million of funds from the 2021 coronavirus relief effort to buy and forgive medical debt. So far, the spending plans eliminate $1.5 billion in medical debt, a roughly 100-to-1 ratio of local government spending.
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