EASTON, Pa. — Nearly 70 percent of medical debt will come off credit reports starting in July.
Three bureaus – Equifax, TransUnion and Experian – made the announcement on Friday.
The debt will be deleted if it has already been paid. It will now take longer for new debts to appear – a year – and in 2023, outstanding debts of $500 and less will be removed from your credit report.
“Many Americans, if faced with a surprise medical bill, even $400 or less, would be unable to afford it,” said Adam Biener, assistant professor of economics at Lafayette College. He also worked for the US Department of Health and Human Services.
He says once in place it will have an immediate impact on the economy.
“And for many, their ability to borrow or participate in financial markets or housing markets, or go to college, will improve,” Biener said.
The Consumer Financial Protection Bureau released a report that estimates $88 billion worth of medical bills appear on credit reports. Nearly 20% of American households have medical debt. Collections can reduce your credit score by more than 100 points.
“And even worse, it’s not evenly concentrated across the country — black, Hispanic, younger, lower-income Americans tend to have more medical debt,” Biener said.
Lehigh Valley Health Network tells 69 News they think it will have little to no impact.
“It’s not a debt relief policy. If you have medical debt, the patient will still owe that money,” Biener said. “So from a provider perspective, there is no difference.”