The number of people with medical debt on their credit reports fell by 8.2 million—or 17.9%—from 2020 to 2022, according to a Tuesday report from the Consumer Financial Protection Bureau. use.
White House officials said in a separate draft report that the two-year drop could stem from their policy. Among the programs they say have contributed to debt relief is the expansion of the Affordable Care Act, which added 4.2 million people with some form of health insurance. Additionally, local governments are leveraging $16 million in coronavirus relief funds to clear $1.5 billion in medical debt.
The CFPB has also made a sustained effort to reduce medical debt. The major credit rating agencies said last year that they would no longer include in their reports medical debts under $500 or debts that have been repaid. Agencies will also extend the time it takes to add medical debt to reports from six months to a year, which could give families more time to pay off debt before being penalized with a lower credit score. .
White House officials said the debt relief could reduce concerns about medical bills that could prevent people from going to needed doctor appointments and filling prescriptions.
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While economic measures like unemployment and inflation can fluctuate up and down, the reduction in medical debt shows steady progress is being made. About 13.5% of the 279 million people with credit reports have at least one medical debt, down from 16.4% in 2020 and 19.4% in 2014.
However, unpaid medical bills account for more than half of total debt in collections, according to the White House report. As a result, medical debt exceeds credit cards, personal loans, and utility bills and phone bills combined.
There is also evidence that the decline predates Joe Biden’s presidency. The amount of medical debt on credit reports fell to $111 billion from $143 billion between 2018 and the first half of 2021, according to a March 2022 report by the CFPB.
But communities like Chicago, New Orleans, Pittsburgh, and Toledo, Ohio, are using $16 million in funds from their 2021 COVID-19 relief to buy medical debt and write off debt. So far, the spending plans are eliminating $1.5 billion in medical debt, a ratio of about 100 to 1 on local government spending.
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