More people have health insurance than ever before, but many still struggle to pay for care. According to a new report, medical debt is the No. 1 reason consumers reported being contacted by a collection agency. If efforts to overhaul the health law result in more people losing their coverage, those numbers could rise.
The study by the federal Consumer Financial Protection Bureau found that 59 percent of people who reported they had been contacted by a debt collector said it was for medical services. Telecommunications bills were the second most common type of overdue bill for which debt collectors pursued payment, at 37 percent, and utilities were third, reported by 28 percent.
Unlike other types of debt, people with medical debt were prevalent across a range of income levels, credit scores and ages.
The survey sample was drawn from the CFPB’s consumer credit panel, a random sample of credit records from one of the three major credit reporting agencies.
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Conducted between December 2014 and March 2015, the survey asked respondents about their experiences over the past year with debt collectors.
Having medical debt turned over to collections can be a double whammy.
“It’s not just that people may be reluctant to go for care because of the debt they might incur,” said Mark Rukavina, a Boston-based health care consultant whose work has focused on affordability and medical debt. “It might also ruin their credit.” Having a medical bill in collection can substantially reduce consumers’ credit scores, Rukavina said.
The health law required nonprofit hospitals to take several steps to retain their federal nonprofit status, including establishing written charity care policies. Hospitals must determine whether patients are eligible under their policies and provide it for those who are. They also must limit how much uninsured patients are charged and restrict aggressive billing and collections activities. Under those rules, nonprofit hospitals are barred from initiating “extraordinary collection actions” (such as reporting to credit bureaus, garnishing wages or placing a lien on property or taking legal action) until 120 days after the first billing statement is sent.
Although the rule doesn’t apply to for-profit hospitals, the regulation introduced a federal standard for reporting medical debt, Rukavina said.
The proportion of families