Medical Debt and Its Relevance when Assessing Creditworthiness
![handle is hein.journals/sufflr46 and id is 1009 raw text is: Medical Debt and Its Relevance
When Assessing Creditworthiness
Mark Rukavina*
ABSTRACT
Empirical data, qualitative analysis, and case studies document the
prevalence of medical debt in America. However, the influence of medical
debt on credit reports and scores has not been thoroughly examined. We do
know that medical payment data are not uniformly reported to consumer
reporting agencies. Unlike other credit-report information, the type of entity
furnishing the data often determines whether medical-bill data are used in a
credit score. We also know that medical-billing errors are commonplace and
that medical collections frequently involve disputes with insurance companies
over liability for the accounts. Such distinctive problems-together with the
unique conditions under which medical debt is incurred--raise concerns about
the predictive value of medical payment data in assessing credit risk.
I. INTRODUCTION
Millions of Americans who experience illness or injury, even those with
health insurance, are at risk of incurring medical bills associated with their
medical treatment. Many pay for their healthcare at or near the time of
treatment. Some pay outstanding medical bills over time after negotiating
short-term payment plans with their healthcare providers. Still others struggle
for extended periods before ultimately paying their medical bills. Millions of
American families incur billions of dollars in medical bills each year.' While
some may choose to ignore these bills, millions of Americans experience
privations paying them. The stress of dealing with illness is exacerbated when
medical bills find their way onto a credit report, resulting in further financial
distress for families.
Healthcare spending in the United States totaled $2.7 trillion in 2011,
* Principal at Community Health Advisors, LLC. Prior to establishing Community Health Advisors, Mark
served as Executive Director of The Access Project, a national, nonprofit, research and advocacy organization.
1. See National Health Expenditure Projections 2010-2020, CENTERS FOR MEDICARE AND MEDICAID
SERVICES, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/National
HealthExpendData/Downloads/proj20lO.pdf (last visited Mar. 10, 2013) [hereinafter Projections 2010-2020]
(explaining national spending on healthcare reaching trillions).](ViewImageLocal?handle=hein.journals/sufflr46&div=45&collection=&method=preview&ext=.png&size=3)
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Medical Debt and Its Relevance when Assessing Creditworthiness
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