Medical Debt Among Insured Consumers: The Role of Cost Sharing, Transparency, and Consumer Assistance

 Karen Pollitz
The Henry J. Kaiser Family Foundation
Jan 08, 2015 |

recent report issued by the Consumer Financial Protection Board (CFPB) finds that medical debts account for a majority (52%) of debt collections actions that appear on consumer credit reports.  This report offers yet another reminder that a broader view of health insurance – not just at how many have coverage, but also the effectiveness of coverage – is warranted.  An earlier Kaiser Family Foundation report found that 1 in 3 Americans struggle to pay medical bills, and that 70% who do so are insured.

The CFPB report confirms that medical debt frequently occurs among people with no other history of credit problems.  When it does, it can have serious and long range financial consequences. Referral of medical debts to collections damages a person’s credit rating significantly and for many years, limiting access to mortgages, car loans, and other consumer credit.  Health consequences are also possible; as the Kaiser report observed, once in debt, people may delay or forego other needed care to avoid incurring further unaffordable medical bills.