Study: 43 Million Americans Carry Unpaid Medical Bills

One of the promises made by supporters of Obamacare was that the law would result in lower medical costs, but a new study finds medical debt is ruining the credit of millions of Americans.

According to a report released today by the Consumer Financial Protection Bureau (CFPB), an estimated 43 million consumers with a credit report at a nationwide consumer reporting agency have one or more medical accounts in collection.

In addition, 52 percent of all overdue debt accounts on credit reports are related to medical services and the study shows that if it were not for those medical debts, many consumers would be deemed creditworthy.

For 15 million people, medical debt is the only debt they have in collections in their credit report.

The report also found that many debts are smaller than other kinds of debt, but confusion may lead some individuals to delay payment or to them not knowing they even owe money.

"It’s hard for consumers to navigate the medical debt maze and come out with a clean credit report on the other side," said CFPB Director Richard Cordray in a statement. "The CFPB is taking action to improve credit report accuracy. Getting medical care should not make your credit report sick."

While the average medical bill owed is $579, some consumers may simply be unaware of the debt they owe.

"Some consumers may just be confused about what they owe, believe the debt has already been paid, or that they simply do not owe it. Credit scores that treat medical and non-medical debts the same over-penalize the millions of consumers who have medical debt," writes Corey Stone, assistant director of the Bureau's Office of Deposits, Cash, Collections, and Reporting Markets.

The bureau announced new requirements that will require major credit bureaus to begin tracking credit information "furnishers," such as hospitals and doctors, that produce the most billing disputes, and to determine the reasons for the disputes.

"Most notably, these reports will specify the number of times consumers dispute information on their credit reports during that period. It will also list furnishers with the most disputes, industries with the most disputes, and furnishers with particularly high dispute rates relative to their peers. We will also see how those disputes get resolved," Cordray said today at a public meeting in Oklahoma City.

A study by the Federal Reserve Board concludes over half of all collections on credit reports are associated with medical bills, the CFPB reported in a similar study of medical debt released in May.

In October, NerdWallet Health released a survey that found that more Americans are facing financial strains from medical debt than from any other kind of debt.

The online survey conducted by Harris Poll revealed that Americans pay three times more in third-party collections of medical debt than bank and credit card debt combined, while one in five can anticipate being contacted by a collection agency at some point about medical bills in 2014.

"All of the audited hospitals overcharged Medicare and were ordered to repay the government, raising important questions about the magnitude of errors and overcharges imposed on consumers," the report states.

According to the survey, as many as 63 percent of respondents said the bills they received were more costly than they had anticipated.

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