WASHINGTON — The number of people with medical debt on their credit reports fell by 8.2 million — or 17.9% — between 2020 and 2022, according to a report Tuesday from the US Consumer Financial Protection Bureau.
White House officials said in a separate draft report that the two-year decline likely stems from their policies. Among the programs they say helped reduce debt was an expansion of the Obama-era health care law that added 4.2 million people with some form of health insurance. Local governments are also leveraging $16 million in corona relief funds to wipe out $1.5 billion in medical debt.
There has also been a sustained effort by the CFPB to reduce physician debt. The major credit rating agencies said last year that they would no longer include in their reports medical debt under $500 or debt that had already been repaid. The agencies also will extend the time it takes to add medical debt to reports from six months to a year, potentially giving families more time to pay back before being penalized with lower credit scores.
White House officials said the drop in debt could reduce fears of medical bills that can prevent people from making necessary medical appointments and filling prescriptions.
White House press secretary Karine Jean-Pierre told reporters at Tuesday’s briefing that Biden’s policies played “a critical role in reducing the burden of medical debt for millions of American families.”
While economic measures such as unemployment and inflation can fluctuate up and down, the decline in medical debt shows that steady progress is being made. About 13.5% of the 279 million people with credit reports had at least one medical debt, down from 16.4% in 2020 and 19.4% in 2014.
Still, unpaid medical bills account for more than half of all debt in debt collection, according to the White House report. As a result, medical debt exceeds credit card, personal loan and utility and phone bills combined.
There are also signs that the decline predates the Biden 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 from the CFPB.
But communities like Chicago, New Orleans, Pittsburgh and Toledo, Ohio, are using $16 million in funds from the 2021 coronavirus waiver to buy medical debt and forgive it. So far, the spending plans eliminate $1.5 billion in medical debt, a ratio of about 100 to 1 for local government spending.