CFPB: Americans Trapped in $88B Medical Billing “Doom Loop”

The American healthcare system is held up by a billing, payments, collections and credit reporting infrastructure riddled with mistakes, the Consumer Financial Protection Bureau (CFPB) said in a new report Tuesday (March 1).

Within that system, the CFPB said, mistakes are common, with patients often struggling to get these errors fixed or resolved, leading to a system where Americans have $88 billion in medical bills on their credit reports.

“When it comes to medical bills, Americans are often caught in a doom loop between their medical provider and insurance company,” said CFPB Director Rohit Chopra. “Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.”

The report shows that medical bills are often incurred through unexpected events, subject to “opaque pricing” and involve complex insurance or charity care coverage and pricing.

Patients in emergency situations might not even sign billing agreements until after treatment. Other patients — those dealing with chronic illnesses, for example — may be desperate for medial care, forcing them to accept treatment at any cost.

“When those bills end up in collections, the repercussions can be far-ranging,” the CFPB said. “Medical bills placed on credit reports can result in reduced access to credit, increased risk of bankruptcy, avoidance of medical care, and difficulty securing employment, even when the bill itself is inaccurate or erroneous.”

The report said the blowback from this issue is especially harsh for people from Black and Hispanic communities, along with well as people with low incomes, veterans, older adults, and young adults across all racial and ethnic groups.

Read more: 21% of US Consumers Paying More Out-of-Pocket Healthcare Costs This Year

Research by PYMNTS last year found that people who live paycheck to paycheck tend to face barriers when finding healthcare because to out-of-pocket costs, and may even delay or skip a medical procedure because of financial challenges.

Our study also noted that “costs not covered by health insurance rose 10% this year and are expected to continue increasing through 2026.”

Among the remedies the CFPB suggests: holding credit reporting companies accountable for routinely reporting inaccurate information, and working with the U.S. Department of Health and Human Services to make sure patients aren’t coerced into paying bills beyond what they owe.