Medical debt sank his credit. New Credit Bureau Changes Won’t Help

CHARLOTTE, NC — After a year of chemo and radiation therapy, doctors told Penelope “Penny” Wingard in 2014 that her breast cancer was in remission. She had prayed for this good news. But it also meant she no longer qualified for a program in her state that offered temporary Medicaid coverage for patients undergoing active breast cancer treatment.

Wingard became uninsured. She had survived the medical toll, but the financial toll was ongoing.

Bills for follow-up appointments, blood tests and scans quickly piled up. Soon, her oncologist said he wouldn’t see her until she paid off her debt.

“My hair hadn’t even grown back after the chemo,” Wingard said, “and I couldn’t see my oncologist.”

Medical debt caused her credit rating to drop so low that she struggled to qualify for loans, and applying for jobs and apartments became a heartbreaking experience.

“It’s like you’re being punished for being sick,” Wingard said.

Earlier this year, when three national credit bureaus announced new policies to deal with medical debt, consumer advocates celebrated, believing it would bring relief to patients like Wingard. But it turns out the changes aren’t enough to help him or many other black and low-income patients, who are often the hardest hit by medical debt.

Under the new policies, Equifax, Experian and TransUnion will remove from credit reports all debts paid or that were less than $500, even if they are unpaid. It doesn’t erase what people owe, but the idea is to remove the black mark of collections from their credit so they can more easily achieve milestones like qualifying for a car or home loan.

The changes, which will take full effect in 2023, are expected to benefit about 16 million Americans. But a federal report released this summer suggests they may not be the ones who need it most.

“While credit reporting companies have trumpeted this as a big change, the fact is they’re just cutting out the little things,” said Ryan Sandler, report co-author and senior economist at US Consumer Financial. Desktop protection. “They may not be doing a thing as well as their press releases would have you believe.”

Those most burdened by medical debt tend to be black or Hispanic, low-income, and in the South. A national Kaiser Family Foundation poll found that 56% of black adults and 50% of Hispanic adults say they have current debt due to medical or dental bills, compared to 37% of non-Hispanic white adults. And a study published in 2021 found that medical debt was highest in low-income communities and in Southern states that had not expanded Medicaid.

But, Sandler said, “the population that is going to have all of their collections removed is somewhat more likely to live in predominantly white neighborhoods and higher-income neighborhoods.”

Recoveries under $500 often result from unpaid copayments or coinsurance, Sandler said, and those insured are more likely to be wealthier and whiter.

Someone like Wingard — a black woman living in North Carolina — is less likely to benefit from new credit company policies.

After Wingard’s oncologist cut her, it took almost six months to find another doctor who would see her while leaving the bills unpaid.

North Carolina hasn’t expanded Medicaid, so Wingard, who is 58 and doesn’t have young children, doesn’t qualify for her state’s public insurance program.

She estimates that her total medical debt now stands at over $50,000. It’s not just about cancer care, but also about bills for unrelated health issues that grew over the following years.

She has worked as an after-school teacher and tutor, COVID-19 contact tracer, and driver for a public transit service, but none of those jobs come with health insurance benefits. Wingard cannot afford private insurance. That left her on the hook for bill after bill after bill. His credit report shows five pages of notices from collection agencies representing doctors’ offices, hospitals and labs.

Wingard is resourceful. She tracked down clinics that operate on sliding scale fees, pharmacy programs that lower copayments, and nonprofits that help cover health care costs. But that wasn’t enough to get her out of debt.

In February, Wingard needed a specialist mammogram to check for cancer recurrence. Prior to the appointment, she contacted a local nonprofit that agreed to cover the costs. But a few weeks after the procedure, Wingard received a bill for nearly $1,900. There was miscommunication between the nonprofit and the hospital, Wingard said. As she tried to fix the problem, the bill went to collections. It’s over $500, so it won’t be removed even when new credit agency policies take full effect next year.

“You fight so hard and go through so much,” Wingard said. “Yet sometimes you don’t see any kind of relief.”

According to the KFF poll, nearly 20% of Americans with medical debt don’t think they’ll ever be able to pay it all back. Wingard resigned herself to living with the ramifications.

Her refrigerator and stove have been broken for over a year. She can’t qualify for a loan to replace them, so instead of baking chicken from her favorite family recipe, she often settles for a can of fast food soup or chicken wings.

In an emergency — like when she had to fix a broken tooth this fall — Wingard borrows from her family. But it’s not easy to ask for money, she says. “It makes you feel useless, like there’s nothing you can do.”

A recently published study found that medical debt makes many people unable to pay for basic utilities, increases their housing and food insecurity, and can “contribute to a downward spiral of poor health and financial insecurity.”

For Wingard, it hurt his ability to find a job. She said two employers told her that bad credit showed up as a red flag during background checks and led to her being denied positions.

Employers sometimes use credit reports as a “character proxy,” explained Mark Rukavina, program director of the nonprofit health advocacy group Community Catalyst. If two applicants are equally qualified but one has poor credit or multiple unpaid debts, employers might view that person as less responsible, he said – despite research showing that medical debt is not a accurate indicator of a person’s likelihood of paying their bills.

While new policies from credit companies are unlikely to improve Wingard’s situation, consumer advocates say there are signs the company is starting to think differently about medical debt.

The Biden administration has advised federal lenders to no longer consider medical debt when evaluating loan applications and has asked the Consumer Financial Protection Bureau to investigate whether medical debt should ever appear on credit reports.

A federal law banning certain types of surprise medical bills went into effect this year, and some states have strengthened medical debt protections by expanding Medicaid or holding nonprofit hospitals responsible for providing financial assistance to low-income patients. revenue.

In August, VantageScore, a company that calculates credit scores, said it would stop using medical collections in its formula.

Wingard is ready for a faster and stronger change. And she has an idea for doing just that: a march on Washington to demand medical debt relief and universal insurance to reduce future bills.

“For a million people to come together there and say we need better health care, I think that would be historic,” she said. “Maybe then they will recognize that we need help.”

This article is from the “Diagnosis: Debt” project, a reporting partnership between KHN, a national news outlet covering health issues, and NPR exploring the magnitude, impact, and causes of medical debt in America. It is based on a survey conducted from February 25 to March 20, online and by telephone, in English and Spanish, among a nationally representative sample of 2,375 American adults, including 1,292 adults with child care debt. current health and 382 adults with health care debt in the last five years.

The margin of sampling error is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current debt. For results based on subgroups, the margin of sampling error may be higher.

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John A. Bogar