Pile of envelopes with overdue utility bills isolated on white
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Medical debt weighs on millions of Americans—as many as half by some estimates. But medical debt isn’t just a common problem; it’s a thorny one.
According to a new report released earlier this month from the Consumer Financial Protection Bureau (CFPB), medical debt was a key source of consumer-reported complaints about debt.
In 2021, the CFPB sent more than 750,000 consumer-reported complaints to approximately 3,400 companies for review and response. Complaints focused on issues such as debt collection and credit or consumer reporting.
In the context of medical debt collection, the biggest source of complaints included written notices and disputed debts.
Nearly one-third (32%) of complaints about medical debt collection were about the related written notices. No other type of debt has as large a percentage of complaints specifically about written notices.
The nature of these complaints included that notices often did not contain enough information to identify and verify the debt. Some consumers reported that they did not recognize the healthcare provider listed on the collection notice; some complaints quoted in the report said the consumer had never even been to that provider. Though this issue makes it difficult for consumers to understand their medical bills and debts, it doesn’t mean the bills were incorrect. Individual providers or facilities often belong to larger organizations or billing groups; when the name of these entities shows up on a bill or a collection notice, patients may doubt their legitimacy.
Other complaints about written notices related to the opposite problem: too much information was included. Collection notices detailing medical procedures, tests, and prescriptions made some consumers feel that their protected health information had not been protected, according to the report.
These complaints arose in spite of guidance the CFPB issued in 2020 about the information that debt collectors are required to include in consumer notices.
The other major area of consumer complaints was debt collection, including complaints about communication tactics, false statements or representations, and threats to take legal action or share the consumer’s information improperly.
According to the CFPB, nearly half of complaints about medical debt collections were about disputed debts, up 31% compared to 2018. Specifically, consumers complained that they were in collections for debts they had already paid or that another party—their insurance company, a government payer, or worker’s compensation—was supposed to pay,
The CFPB reported that a significant number of debt collectors stopped attempting to collect the debt after the consumer complained to CFPB.
Consumers often complained to CFPB about small, old medical bills. CFPB data show that the median medical debt in the United States is $310, but some complaints involved even smaller amounts.
Sometimes, the report showed, consumers did not know about the medical debt until they found it had been reported on their credit report. Many consumers noted that they had never been contacted about the bills and discovered them on their own, such as when they checked their credit or applied for a loan.
As one complaint quoted in the report read:
“I first learned this ‘debt’ when I checked my credit report on [credit monitoring service]. My rating had dropped 9 points because there was a collection from [debt collector] on it. I contacted [debt collector] and they told me I owed $10 to a doctor from 2017. I told them I had never been notified by phone or in writing of any such debt. I called the doctor (and their billing company) and they told me their records did not show any such debt, nor did they turn over anything to a debt collection company. I called [debt collector] again and they told me that the collection effort would stay on my credit report until I paid the debt, preferably online on their website.”
The report says that some consumers feel pressure to pay these bills to get them off their credit reports.
According to the CFPB, certain groups—including people of color, low-income people, veterans, and young adults—are more likely to have medical bills appear on their credit reports. The CFPB previously reported that for Black Americans in particular, medical debt contributes to the racial wealth gap, findings consistent with a survey showing that Black business owners are more likely than others to have medical debt.
The No Surprises Act, which took effect at the start of 2022, prohibits some kinds of surprise medical bills. And in March, the three major credit bureaus announced that they would no longer include medical debt newer than one year old or smaller than $500 on consumer credit reports.
These measures should bring some relief to consumers moving forward. But as the CFPB report shows, consumers grappling with historical medical debt may still face uphill battles. Consumer complaints, at least, seem to be a powerful tool—if only a last resort—in gaining clarity and resolving disputes.