A U.S. Government Accountability Office report on medical credit cards and related products follows a request from lawmakers who have expressed concerns about medical debt and predatory lending against people with no insurance or not enough insurance.

The report offers an overview of financial products consumers use when they lack health insurance coverage. It reviews financing options and interest rates charged to consumers using credit cards for medical expenses outside of their insurance coverage.

Reps. Elijah Cummings (D-Md.), Maxine Waters (D-Calif.) and Sen. Ed Markey (D-Mass.) requested the report last year after hearing concerns that consumers may have been misled by financial institutions offering medical credit cards and products such as installment loans.

More legislative efforts have occurred recently to address the amount of medical debt in the U.S. Waters recently introduced legislation to require consumer reporting agencies to remove any information related to fully paid or settled medical debt from a consumer’s credit report within 45 days.

In May, the Consumer Financial Protection Bureau began urging companies that use credit scoring models to treat medical debt differently than other debt. The request followed a study by the CFPB that revealed consumers with medical bills in collection can see their credit scores hit by as much as 22 points compared to those with other types of debt.

The agency said credit scoring models were harming people with medical debt because they do not differentiate between medical versus non-medical debts nor paid versus unpaid medical bills when in collection.

The study found that models were ranking consumers with medical debt 10 points lower than those with other outstanding debts like utility and cell phone bills. It was worse for consumers who paid back their medical bills in collection, as they faced a median 16-to 22-point lower credit scoring even though they were less likely to be delinquent than other consumers with the same score.

The CFPB reviewed five million anonymized credit records and performance data for two years ending September 2013. The study found that consumers with medical debt were more likely to pay it back comparable to that of consumers with scores roughly ten points higher.


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