By Consumers for Quality Care, on December 14, 2022
Private companies designed to assist consumers with paying off medical debt are instead only compounding the issue, according to Kaiser Health News.
Patient financing has emerged as a source of hope for the millions of consumers in medical debt looking to pay off their bills. Hospitals and medical providers even encourage consumers to utilize the services of these finance firms. However, these companies and their marketing tactics are causing consumers to fall deeper into debt with high interest rates and fees for missed payments while their profits reach all-time highs. According to research firm IBISWorld, financing companies like these can have profit margins topping 29 percent, seven times more than hospital margins.
Patient advocates believe predatory practices like this need to end. Mark Rukavina, Program Director at the nonprofit Community Catalyst, stated, “We’re dealing with sick people, scared people, vulnerable people. Dangling a financial services product in front of them when they’re concerned about their care doesn’t seem appropriate.”
Further contributing to the medical debt crisis are the type of payment plans these private companies offer. For example, one company offers lower interest rates for consumers that make larger monthly payments. A former employee of this company stated that this practice benefits high-income earners and hurts low-income consumers. “I see wealthier families benefiting. Lower-income families that have hardship are likely to end up with a higher overall balance due to the interest,” said the former employee. This company has also reported missed payments to hospitals, who then can sue or report the consumer to credit bureaus.
These predatory practices only exacerbate America’s medical debt crisis, particularly among vulnerable populations. CQC urges lawmakers across the nation to put an end to these sorts of predatory practices.