About 8% of Americans have medical debt. But as new data from Kaufman Hall shows, certain populations bear a significant share of the country’s overall medical debt burden, including people in poor health, the uninsured and Black people.

Additionally, the 14% of Americans with medical debt who owe over $10,000 account for nearly three-quarters of the nation’s total medical debt burden. However, the nearly 50% of Americans with medical debt who owe less than $2,000 account for just 5% of the nation’s total medical debt burden.

In April 2023, the three major credit reporting agencies – Equifax, Experian and TransUnion – jointly announced that all medical debt collections with an initial reported balance of less than $500 would be removed from U.S. consumers’ credit reports.

“We believe that removing medical debt with an initial reported balance of less than $500 from (U.S.) consumer credit reports will have a positive impact on people’s personal and financial well-being,” the CEOs of the three credit bureaus said at the time.

The reporting changes had a positive impact on consumers who had low levels of medical debt, but had no impact on those who bear the majority of the debt burden.

In June 2024, the Consumer Financial Protection Bureau expanded these efforts by proposing a rule that would remove medical bills from most credit reports.

Specifically, the proposed rule would eliminate the exception that currently allows lenders to use information about medical debt to determine creditworthiness and would prohibit the repossession of medical equipment if the individuals are unable to repay the loan.

“Although credit record removal offers some relief from the ripple effects of medical debt, policymakers are increasingly experimenting with direct relief,” Kaufman Hall noted.

For example, the American Rescue Plan provided $7 billion to states, counties and cities to reduce medical debt. In addition, in July 2024, CMS approved the North Carolina Medical Debt Relief Incentive Program, which allows the state to use its Medicaid program to incentivize hospitals to reduce medical debt that has existed for more than a decade.

As Americans continue to struggle with the burden of medical debt, policymakers are trying to mitigate the impact of this debt on their credit scores and debtors’ overall financial situation.

Jill McKeon has been covering healthcare cybersecurity and privacy news since 2021.