3/31/2022 – Mark’s Market Update
Hospital Bills Suck
After three weeks of ever-worsening rates – they’ve finally stabilized and we’re now trending at just above 5% for 30-year conventional rates and about 4.875% to 5.125% for FHA and VA loans.
I don’t know of many people who enjoy going to the hospital – either as a patient or as a visitor.
But I know of even fewer people who enjoy getting hospital bills and trying to figure out what they actually owe. Truly, the billing process is byzantine, what with how many different service providers are involved, and then how they account for what needs to be paid, and how they communicate with you, and when, and how many times…is absolutely awful.
When my son, Liam, was born with his heart problem almost 13 years ago, we began the stress of dealing with the surgeries and care for over a month in the hospital. Once we got home, though, I knew that we were in for an entirely different level of stress – one that kicked into overdrive once the first round of hospital bills started arriving.
Luckily, Tammy, having dealt with durable medical equipment and insurance companies at her job, and me…seeing the impact of medical collections on my clients when looking at their credit reports…knew what needed to be done. We knew insurance was going to be paying for most of it – but we needed to make sure they actually did. So, each time we got a bill – she called, e-mailed, and pushed back…and pushed back hard each time…until finally, we had what was actually supposed to be paid by us.
After about a year (and what amounted to being a full-time job for Tammy to manage the above process) – we had it whittled down to what was supposed to be paid. After a year, I think, all told, we were out about $20,000 in copays and deductibles for what ended up being about a $1,000,000 baby. But, with how the first round of bills showed up and what they said we owed…it didn’t look like it was going to be $20,000.
Over the years – I can’t tell you how many people I’ve pulled credit on and found little medical things – or sometimes big. In the mortgage world – we IGNORE medical collections and bad medical debts – because we know that people don’t wake up in the morning and say, “You know what? I’m gonna fall off a ladder today…and then I’m going to have to go to the hospital to have them fix me up – and I’m not going to have insurance, or I’m going to have insurance that chooses not to pay for something, or I’m going to have insurance that chooses to pay for something but only after months of fighting them, or, they’re ultimately going to pay but only pay for part of what they should have…etc, etc. However, they do wake up and say, “I’m not going to make my car payment today”. That’s why we don’t care when we see medical collections on a credit report.
However, that doesn’t mean that there was no impact on credit SCORES – and that’s the big thing. While we may not care about medical collections because of the above – the impact on credit scores was real – and plenty of people who had good overall credit, but had medical collections (which we didn’t care about), and as a result – had bad credit scores…were out of the market to buy a home. And, it sucked.
Until now. The credit bureaus have announced a major change, effective July 1 and first part of next year, regarding medical collections. Probably one of the first, best, and most common-sense changes I’ve seen the major bureaus make regarding credit reporting in 25 years…
My video summarizes the changes. It’s cool…and definitely needed…because hospital bills suck. They just…do.