Medical debt is relatively common in the United States; however, recent policy changes have starkly reduced the amount that is reported on credit reports. These changes have not eliminated patient financial obligations, but have reduced one of the mechanisms through which not paying medical bills can potentially harm consumers. Perhaps surprisingly, a large body of literature—including randomized control trials and analysis of real world “natural experiments”—shows that reductions in medical debt do not consistently translate to improvements in broader measures of personal finances on average. In part, this may reflect the fact that medical debts are rarely repaid, suggesting their elimination may not free up money for other uses. These results suggest that recent policy changes that reduce the reporting of medical debts may have modest effects on consumer finances on average. Eliminating unpaid medical collections from consumer credit profiles (or forgiving the debt) reduces the costs of unpaid bills to consumers. Mechanically, this also reduces the incentives for consumers to pay such bills. This may trigger reactions from health care providers that affect health care access. To this point, evidence suggests providers are securing larger share of payment prior to delivering services in recent years and relying on medical credit cards to secure prompt payment. These kinds of tradeoffs are important for policymakers to consider given the goals of debt forgiveness. Given the extent of recent changes regarding the reporting of medical debt, it may be prudent to better understand how these policies have affected important outcomes like health care acess or behavior of lenders before considering further policy in this area.
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- United States of America
