Medical debt can be a heavy burden on individuals and families, impacting their financial well-being and ability to access credit or secure housing. However, recent research from the Urban Institute shows that the share of Americans with medical debt in collections has decreased significantly over the past decade. This positive trend is largely attributed to efforts by major credit bureaus to remove paid medical debts from credit reports and delay reporting of unpaid debts.
Despite the overall reduction in the share of people with medical debt in collections, the median amount of unpaid medical debt has actually increased. This highlights the continued struggle that many individuals face in managing their healthcare costs. The rise in median medical debt from $842 in 2013 to $1,493 in 2023 underscores the challenges that people still face in dealing with medical expenses.
In addition to the national trends, the Urban Institute’s research also identified specific states where consumers saw significant reductions in medical debt in collections. States like West Virginia, South Carolina, Oklahoma, Louisiana, and Mississippi experienced substantial decreases in the share of residents with medical debt in collections. Colorado stood out as a state with no medical debt in collections in 2023, following a ban on credit bureaus from including medical debt on credit reports.
The issue of medical debt has garnered attention from regulatory agencies like the Consumer Financial Protection Bureau, which has proposed banning medical bills from credit reports. While these efforts aim to alleviate the financial burden on debtors, it’s crucial to address the root causes of medical debt and its implications on individuals’ overall financial health.
Recent research by KFF revealed that adults with medical debt are more likely to face financial vulnerabilities in other areas, such as carrying credit card balances, lacking a rainy-day fund, and struggling financially. This underscores the interconnected nature of financial challenges and the impact of medical debt on individuals’ overall financial well-being.
In response to the growing concerns around medical debt, certain states, cities, and counties have taken proactive measures to cancel medical debt through federal legislation like the American Rescue Plan Act. This move is expected to alleviate the financial burden for millions of Americans, highlighting the importance of addressing medical debt at a systemic level.
For individuals grappling with medical debt, there are steps they can take to seek financial relief. Negotiating with healthcare providers for lower bills and exploring cost-saving options for prescriptions are practical strategies that can help individuals manage their healthcare costs more effectively.
At Extreme Investor Network, we understand the significance of managing medical debt and its impact on personal finances. Our platform offers unique insights and resources to help individuals navigate financial challenges and make informed decisions to secure their financial future. Stay informed and empowered with Extreme Investor Network for personalized financial solutions tailored to your needs.