Most would agree with the common adage that you get what you pay for, but that’s not the case when it comes to paying for healthcare in America. U.S. spending per capita is up to four times higher than other wealthy countries and yet shockingly, we have the absolute lowest life expectancy of them all.

One contributing factor is that Americans suffer higher death rates from smoking, obesity, homicides, opioid overdoses, suicides, road accidents, and infant mortality. In fact, low-income Americans die at a younger age than poor people in other developed nations because of deep poverty and less access to healthcare.

The other half of the equation is a system that delivers sick care instead of health care and reaps billions of dollars in profits driven by outrageously high fees, opaque pricing, and dubious business practices. And that’s not about to change anytime soon, despite crushing consumer medical debt and rising health plan costs for American employers.

Employers should seek out health plans that are designed to lower the cost of care and improve outcomes. When members spend less on premiums and out-of-pocket costs, they have more resources available to take better care of themselves — from quality food to the pursuit of mental and financial health. Such plans allow people to embrace wellness and bend the life expectancy curve to their advantage.

Medical debt is devastating the credit integrity of American consumers. The Consumer Financial Protection Bureau (CPFB) has taken steps to mitigate this doom loop and the three major credit reporting agencies are now taking action as well, no doubt in response to a greater focus on medical debt.

Transunion, Equifax, and Experian have decided in unison that:

• All paid medical debt will be removed from credit reports.
• Effective July 1, 2022, the time in which to report any outstanding medical debt will be increased from six to 12 months.
• Effective July 1, 2023, outstanding medical debt less than $500 will not be reported at all.

Do No Harm

Consumer healthcare debt is most often incurred by those who are least able to afford it and are most vulnerable to being persecuted for payment. In fact, much healthcare debt should not even be classified as such.

A large proportion of this so-called debt should have been covered from the beginning by hospital financial assistance programs (FAPs), which are mandated by law for non-profit hospitals. These hospitals receive immensely valuable tax-exempt status in return for their commitment to provide services of equal value to patients with financial need.

Research has shown that hospitals fall egregiously short of these charitable commitments. Many neglect to even inform patients that such FAP programs are available to them. Multiple articles and studies, including research conducted by Johns Hopkins University, reveals a “wide variation in charity care provision” and that “many government and nonprofit hospitals’ charity care provision was not aligned with their charity care obligations arising from their favorable tax treatment.”

Moving Forward

Personal credit report relief and similar efforts by the CFPB are promising progress in an area of significant collateral damage caused by the dysfunctional U.S. healthcare business machine. However, bigger strides are needed to protect individuals from the predation and profiteering inherent in our healthcare system.

It’s time to eliminate the financial injury caused by medical debt that’s endured by working Americans. Patients will benefit from next-generation health plans that use advanced, fair market payments for providers, and offer advocates to help patients receive all hospital financial assistance for which they are eligible.

A report from the Consumer Financial Protection Bureau (CFPB) estimates that consumer credit reports include $88 billion in medical debt as of June 2021. The cause is a “complicated and burdensome” medical billing system that creates hard-to-fix errors that increase patient debt and reflect poorly on credit scores.

According to CFPB Director Rohit Chopra, “Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.” Chopra describes Americans as often being “caught in a doom loop between their medical provider and insurance company.”

The report describes a variety of circumstances that feed this doom loop, including:

• Unexpected and emergency events that are subject to opaque pricing and involve complicated insurance or charity care coverage and pricing rules.
• Patients in emergency situations who cannot sign a billing agreement until after receiving treatment.
• Patients with chronic illnesses or who are injured or ill, whose desperation for medical care forces them into treatment at any cost.

The Unfortunate Impact on Consumers

The report notes that the impact of medical debt is especially harmful for Black and Hispanic communities, low income individuals, veterans, older adults, and young adults regardless of race or ethnicity.

Consider these statistics:

• Tens of millions of U.S. households (about 1 in 5) report having medical debt
• 58% of bills in collections are medical bills
• The distribution of past-due medical debt is uneven: Black (28%), Hispanic (22%), White (17%), Asian (10%)
• Medical debt is more common in the southeastern and southwestern U.S., in part because states in these regions did not expand Medicaid coverage

CFPB Action Plan

The CFPB intends to take decisive action to ensure that the consumer credit reporting system is not used coercively against patients and their families to force them to pay questionable medical bills.

Specific actions include:

• Holding credit reporting companies accountable. The CFPB expects the Big Three credit agencies to adhere to Federal law by blocking hospitals that routinely report inaccurate information and contaminate the credit reporting system from accessing their systems.
• Working with federal partners to reduce coercive credit reporting. In addition to partnering with the U.S. Department of Health and Human Services to ensure that patients are not coerced into paying bills more than the amounts due, the CFPB issued a compliance bulletin in January reminding debt collectors, credit reporting companies, and others, that it is illegal to collect or report as owing a debt that is not legally due and owing, including where the billed amount violates the No Surprises Act.
• Determining whether unpaid medical billing data should be included in credit reports. The CFPB will conduct additional research to assess whether consumer credit reports should include data on unpaid medical bills.

Consumers having issues resolving medical debts or facing problems with other consumer financial products or services can submit an online complaint or call the CFPB at 855-411-CFPB (2372).

The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) have done almost nothing over the past decades to protect market competitiveness and consumer interests in healthcare. Employers continue to grapple with ever-rising plan costs as members bear the brunt of fewer healthcare options at a higher cost.

The DOJ and FTC have allowed massive and ongoing acquisitions and mergers by (and sometimes between) hospitals and health systems, pharmacy benefit managers, pharmacies, and insurance carriers to go unchecked. This has fostered monopolies and cartels in these sectors, reducing competition and increasing prices for medical services, drugs, and health insurance.

Consider the following: