How Medical Bills Can Easily Damage Our Credit Records

Elisabeth Rosenthal, who has been writing a series on the cost of health care in the U.S., wrote a piece in the Times Sunday Review this weekend looking at how chaotic medical billing can affect our credit:

Gene Cavallo, 61, a New Mexico businessman who put his children through college, had always paid his bills promptly and had an excellent credit rating, until he required surgical excision of a melanoma on his shin two years ago. The more than 60 bills generated for the surgery and six months of follow-up visits — arriving sporadically and ranging from 18 cents to $17,000 — came to $110,000; his insurance covered about $70,000.

When various providers asked him to pay the remaining $40,000, he requested itemized bills and balked at some of the “ridiculously inflated prices,” such as $85 for tweezers and $20 for a box of tissues. He argued the bills point by point, and ultimately agreed to pay $25,000.

But during the negotiations some of the debt was sent to collection. Two years later, he no longer answers the daily robocalls from collection agencies and has had a couple of credit cards canceled because his score has fallen. “It was a scary thing to do because I own a business and dabble in real estate, so the ability to borrow has always been important to me. And now I have no ability, I assume, to borrow for any reason.”

Rosenthal points out that so many of us are vigilant when it comes to paying bills like credit cards, mortgages, car payments, and so on, but when we receive medical bills with charges for things we don’t quite understand and want to sort out, those bills often get sent to collections or are reported as “past due” to credit agencies before many people have a chance to negotiate.

In other cases, people feel pressured to pay without knowing why a procedure costs the way it does:

Consider Chris Sullivan of Pennsylvania, whose $2,770 bill for an echocardiogram offered a “prompt payment” discount of 20 percent if he wrote a check within 21 days — meaning a discount for not asking questions on a bill for a test he was told would be under $300.

Even worse, one mortgage initiator in Texas says that many applicants aren’t aware that they have medical debt (often in very small amounts) in collection. All the more reason to have easier access to our credit scores.

Photo: Lauren

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