CNN Money reported in 2010 that nearly 30 million adults were contacted by a collection agency regarding unpaid medical bills, and an astonishing 44 million Americans are continuously making payments towards medical debt. As the economy in America continues to worsen, I would say it is fair to assume we will see these numbers increase in 2011. As unemployment rates increase, those with medical insurance decreases, thus having a domino effect on the amount of medical debt that exists. As medical debt is turned over to collection agencies, and it goes unpaid by the patients, these outstanding balances ultimately will stay on patient’s credit for up to seven years. But what will the long term effects be when millions of Americans have tarnished credit scores from medical debt?
A North Carolina Democratic Congressman by the name of Heath Shuler has recently proposed the bi-partisan Medical Debt Responsibility Act of 2011. This proposed bill requires that medical debt up to a balance of $2,500 that has been paid off, be removed from the credit bureaus within 45 days of the payment being made. CNN Money states, “One medical debt can knock off about 50 points from an average credit score.” This proposed bill will not only encourage people to pay their delinquent medical debts, but in return will stimulate the economy by giving people the chance to clear up their credit that was tarnished by past due medical debt.
As always, this proposed Act isn’t being accepted by all. Many lenders believe they have a right to know if a consumer was delinquent on any debt. Credit bureaus and lenders are also stating that all though erasing medical debts from the credit reports will help those that have stumbled upon unfortunate circumstances; it is possible it will aid those who are perfectly capable of paying off their medical bills but may choose not to.