WASHINGTON, D.C. — The Biden Administration is taking new steps aimed at cutting back on medical debt. Officials say these medical credit cards can lead to higher costs for patients when there may be other low to no cost alternatives.
“You go to the emergency room with a broken leg and may be offered a credit card before you’re even told you can apply for financial assistance,” said Diane Thompson, senior advisor to the Director of the U.S. Consumer Financial Protection Bureau.
Now the Consumer Financial Protection Bureau, the Department of Health and Human Services, and the Treasury Department want to hear directly from you about those experiences. The federal government is examining whether patients know the risks and the potential incentives for healthcare providers to offer these high-cost products.
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CFPB officials say medical credit cards often deferred interest between six to eighteen months. But if you haven’t paid off the full amount by that time, officials say it’s a hefty price.
“The interest from that entire period springs back and it is due all once and in one lump sum which if you were going to have problems making payments to beginning with it’s going to make it much harder for you,” said Thompson.
The Washington News Bureau reached out to the top companies that offer medical card cards about this new effort.
In a statement from Wells Fargo, the company said “…we review an applicant’s ability to repay before approving any application.”
A spokesperson from CareCredit said, “our financing offers have been around for decades, are well understood by consumers, and have saved our cardholders billions of dollars in interest over the years.”
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But when patients are hit with medical debt, CFPB officials say the impact isn’t just financial.
“Not just the emotional stress but people will avoid care or delay getting needed care so when they do it, it’s more expensive and their conditions are worse,” said Thompson.
Federal officials say this public input will help them as they try to address medical debt and these collection practices.
You can submit comments about your experience using medical credit cards to these agencies for the next 60 days.
On Tuesday, July 11 the Consumer Financial Protection Bureau (CFPB) will host a hearing on medical billing and collections—with a focus on medical payment products, such as medical credit cards and installment loans.
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Full statement from CareCredit:
“For more than 35 years, CareCredit has offered consumers the ability to get the care they want. CareCredit’s convenient and transparent financing options make health and wellness care more affordable and expand consumers’ access to things like dental work, pet care or audiology. Our financing offers have been around for decades, are well understood by consumers, and have saved our cardholders billions of dollars in interest over the years. We are proud of how satisfied our customers are and know that several thousand messages have already been sent from CareCredit cardholders to their Congressional representatives and the CPFB to share support for the product. We look forward to having the opportunity to share this information with policymakers.”
Full statement from Wells Fargo:
“Wells Fargo’s Health Advantage offers a cost-effective solution for customers to manage expenses for a limited range of services: dental, audiology, vision, and veterinary. Our estimated market share is less than one percent.
Given our commitment to responsible lending, we review an applicant’s ability to repay before approving any application. All rates and terms are disclosed in the application and the maximum interest rate a customer will ever pay is 12.99%. Most of our customers pay off their balances without paying any interest.
The card is not available for procedures covered through subsidized or charitable medical coverage and our provider network does not include medical hospitals, out-patient surgical centers, or urgent care centers.”
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