Medical Debt Relief
The Growing Burden of Medical Debt in the U.S. and Paths Toward Relief
Medical debt continues to be a significant financial strain for millions of Americans. Despite over 90% of the U.S. population having some form of health insurance, unexpected medical expenses can still lead to substantial debt. High deductibles, cost-sharing, and out-of-pocket expenses contribute to this ongoing issue.
The Scope of the Problem
Recent data indicates that approximately 20 million people, nearly 1 in 12 adults, owe medical debt. The total amount owed is estimated at $220 billion. Notably, about 14 million individuals owe over $1,000, and 3 million owe more than $10,000 in medical debt.
Certain demographics are disproportionately affected. Adults with disabilities report medical debt at a rate of 13%, compared to 6% for those without disabilities. Additionally, individuals reporting their health status as "fair" or "poor" are more likely to owe medical debt than those in better health.
Impact on Credit Scores
Medical debt can significantly affect credit scores. Unpaid medical bills that are sent to collections agencies may appear on credit reports, potentially lowering credit scores and affecting the ability to secure loans or favorable interest rates. However, recent changes aim to mitigate this impact.
As of July 1, 2022, paid medical collection debt is no longer included on U.S. consumer credit reports. Furthermore, unpaid medical collections under $500 are excluded, and consumers have a one-year grace period before larger unpaid medical bills appear on their credit reports.
Legislative Efforts: Medical Debt Forgiveness Act
In response to the growing concern over medical debt's impact on creditworthiness, legislative measures have been proposed. The Medical Debt Relief Act of 2023 (H.R.6003 and S.3103) seeks to prohibit consumer reporting agencies from including medical debt on credit reports. Additionally, it mandates that the Consumer Financial Protection Bureau amend regulations to prevent creditors from using medical debt information when considering credit applications.
Nonprofit Interventions: RIP Medical Debt
Organizations like RIP Medical Debt (now known as Undue Medical Debt) play a crucial role in alleviating the burden of medical debt. This nonprofit purchases and forgives medical debt, focusing on individuals with low incomes or those facing financial hardship. Since its inception, the organization has abolished over $14.8 billion in medical debt, assisting more than 9.8 million people.
Notably, cities like Cleveland have partnered with such organizations to eliminate medical debt for residents. In May 2025, Cleveland used $1.9 million in pandemic stimulus funds to erase $165 million in medical debt for over 160,000 residents.
Conclusion
Medical debt remains a pervasive issue in the United States, affecting millions and influencing financial stability. While recent policy changes and nonprofit efforts offer some relief, continued attention and action are necessary to address the root causes and provide comprehensive solutions for those burdened by medical debt.
Matthew Collins
New York
Matthew Collins brings over 10 years of experience helping people reduce debt and take back control of their finances.
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