Damaged Credit Delays the Dream of Buying a Home

It makes me sick about medical costs and how this whole thing is done.

Amanda Pitzo

Joe Pitzo, 42, Brookfield, Wisconsin

Approximate medical debt: $350,000

Medical Issue: Cancer

What Happened: Joe Pitzo and his wife, Amanda, had been married only five months when Joe was diagnosed with brain cancer in 2018. He would need brain surgery and extensive rehab.

They’d been planning to buy a house for their blended family of five children. Instead, they shifted their attention to doctor’s visits, insurance paperwork, and hospital bills. And their finances fell apart.

“This just took a major toll on my credit,” Joe said. “It went down to next to nothing.”

Joe had insurance through his employer. Prior to his brain surgery, the couple confirmed that the surgeon and hospital were in their insurer’s network. But around 4 p.m. the day before the procedure, their insurer said a device the surgeons planned to use was medically unnecessary. It was not covered.

Joe and Amanda proceeded with the surgery, figuring they could deal with the bills later.

The bills, it turned out, topped $350,000.

Joe said the debt dragged down his credit score by several hundred points. 

Their best hope for a home loan became Amanda, who didn’t have much credit, she said. She’d never taken out a mortgage or a car loan.

What’s Broken: Difficulties with health insurance are a common feature of medical debt in the U.S.

Two-thirds of Americans with health care debt say they haven’t fully paid a bill because they were expecting their health plan to cover it, according to a nationwide survey conducted by KFF. 

But health insurance rules and restrictions are often so complex that even diligent patients struggle to make sense of them. 

It’s also not uncommon for medical debts to hurt patients’ credit scores. There’s growing pressure to change that.  

This spring, the three leading credit agencies announced they would stop using small past-due medical bills in credit score calculations. And the federal Consumer Financial Protection Bureau plans to investigate whether any health care bills should be counted.  

What’s Left: The Pitzos managed to get the hospital to reduce their charges to about $30,000.

They worked to build Amanda’s credit so she could apply for the loan and were finally able to buy a house in spring 2022.

They’re still making payments on about $19,000 in medical bills.

“It makes me sick about medical costs and how this whole thing is done,” Amanda said. 

About This Project

“Diagnosis: Debt” is a reporting partnership between KHN and NPR exploring the scale, impact, and causes of medical debt in America.

The series draws on the “KFF Health Care Debt Survey,” a poll designed and analyzed by public opinion researchers at KFF in collaboration with KHN journalists and editors. The survey was conducted Feb. 25 through March 20, 2022, online and via telephone, in English and Spanish, among a nationally representative sample of 2,375 U.S. adults, including 1,292 adults with current health care debt and 382 adults who had health care debt in the past five years. The margin of sampling error is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current debt. For results based on subgroups, the margin of sampling error may be higher.

Additional research was conducted by the Urban Institute, which analyzed credit bureau and other demographic data on poverty, race, and health status to explore where medical debt is concentrated in the U.S. and what factors are associated with high debt levels.

The JPMorgan Chase Institute analyzed records from a sampling of Chase credit card holders to look at how customers’ balances may be affected by major medical expenses.

Reporters from KHN and NPR also conducted hundreds of interviews with patients across the country; spoke with physicians, health industry leaders, consumer advocates, debt lawyers, and researchers; and reviewed scores of studies and surveys about medical debt.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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