There is no shortage of government agencies, think tanks and consumer groups that think so.
According to the Consumer Credit Counseling Service, Americans spent $2.6 trillion on health care in 2010 ($303 billion of which was for out-of-pocket expenses).
In shelling out all that cash, 29 million Americans say they had to “deplete” their savings to cover their medical bills, the CCCS adds. The group also cites data showing 40% of American adults have problems paying down medical debt.
Studies also show that credit scores can drop by as much as 100 points for unpaid medical bills, according to a study from the Federal Reserve. The Fed study notes that 50% of all debts that appear on credit reports are related to unpaid medical costs, with most of those debts under $250.
Increasingly, consumer groups and federal legislators are viewing medical debt levies, as they pertain to credit scores, as unfair and potentially lethal to a consumer’s financial well-being.
This month, four Democratic U.S. Senators fired off a letter to Consumer Financial Protection Bureau Director Richard Cordray asking him to examine medical debt credit practices and consider “regulatory action” to curb the potential harm to U.S. consumers.
The letter, written and signed by Oregon’s Jeff Merkley, New York’s Chuck Schumer, New Jersey’s Robert Menendez and Ohio’s Sherrod Brown, claimed the medical debt collection process is error prone and has inflicted “serious damage” on credit scores for millions of Americans. The letter also notes that, even when the debt is repaid, the “black mark” stays on the consumer’s credit report for seven years.