WASHINGTON (NEXSTAR) – Federal agencies are investigating whether medical credit cards hurt consumers more than help.
The Consumer Financial Protection Bureau, U.S. Department of Health and Human Services and U.S. Treasury Department want to learn more about patients’ experiences with the cards and providers’ incentives to offer them.
“It’s wrong,” President Joe Biden said during an announcement about how his administration is working to lower healthcare costs.
The cards typically start with zero interest. But if patients cannot pay off the loan in time or miss a payment, the CFPB found they can face interest rates up to nearly 30 percent.
“They [CFPB] have seen a huge rise in the rate at which consumers are being marketed these medical credit cards,” said Christen Linke Young, deputy assistant to the President for health care.
Linke Young said the agencies are investigating whether the practice of providers pushing patients to use the cards to pay their bills is legal.
“To make clear that our consumer protection laws apply and that consumers should be protected,” Linke Young said.
From 2018 to 2020, the CFPB estimates patients paid $1 billion in interest on these cards and other medical financing. The agency said that amount is growing as the practice spreads.
“Somebody’s making money, but it’s not the patients,” said Noam Levey, senior correspondent with KFF Health News.
Levey said patients are often in a vulnerable situation and do not have all the information they need to understand the credit cards’ terms and their risks.
“These are not the kind of traps that people get in because they bought a Mercedes that they should not have bought,” Levey said.
Levey found about 40 percent of adults in the U.S. have some form of medical debt, and this specific issue could impact millions.
“I think where this is going is into a broader discussion about what can be done to protect patients from going into debt in the first place,” Levey said.
Any policy changes would ultimately fall on Congress.
The CFPB released its first report on medical credit cards in May and while the agency did not recommend any actions against the lenders, it concluded, “Many people would be better off without these products.”