In its report, the Consumer Financial Protection Bureau (CFPB) estimated that people in the U.S. paid $1 billion in deferred interest on medical credit cards and other medical financing in just three years, from 2018 to 2020.
The interest payments can inflate medical bills by almost 25%, the agency found by analyzing financial data that lenders submitted to regulators.
“Lending outfits are designing costly loan products to peddle to patients looking to make ends meet on their medical bills,” said Rohit Chopra, director of CFPB, the federal consumer watchdog. “These new forms of medical debt can create financial ruin for individuals who get sick.”
Millions of patients sign up for credit cards, such as CareCredit offered by Synchrony Bank. These cards are often marketed in the waiting rooms of physicians’ and dentists’ offices to help people with their bills.
The cards typically offer a promotional period during which patients pay no interest, but if patients miss a payment or can’t pay off the loan during the promotional period, they can face interest rates that reach as high as 27%, according to the CFPB.
Nationwide, about 100 million people — including 41% of adults — have some kind of health care debt, KFF Health News found in an investigation conducted with NPR to explore the scale and impact of the nation’s medical debt crisis.
The vast scope of the problem is feeding a multibillion-dollar patient financing business, with private equity and big banks looking to cash in when patients and their families can’t pay for care, KFF Health News and NPR found. In the patient financing industry, profit margins top 29%, according to research firm IBISWorld, or seven times what is considered a solid hospital profit margin.
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