Five senators with a reputation for progressive policy sent an open letter to Wells Fargo and Synchrony Financial, both of which have their headquarters in Stamford, seeking for clarification on the subject of medical credit cards.
Christopher Murphy of Connecticut, Bernie Sanders of Vermont, Sherrod Brown of Ohio, Elizabeth Warren of Massachusetts, and Edward Markey of Ohio all signed the letter, which listed a number of issues with credit cards and posed a number of inquiries concerning the industry.
Medical credit cards are a common financial tool for coping with the rising expense of healthcare even though they can only be used to pay for medical operations. With more than 12.7 million cardholders, Synchrony’s CareCredit is one of the most widely used choices. The letter from the senators said that according to U.S. Securities and Exchange records, Synchrony received $2.3 billion ($15 percent of total fees) from the Health and Wellness business in 2021, which was a year with $4.2 billion in revenues overall.
According to the website for the card, “CareCredit is distinct from a typical credit card.” Use it to cover out-of-pocket medical expenses that are not covered by insurance; further special financing options may not be available with other cards.
The Wells Fargo Health Advantage Card, which can only be used for medical treatments, is also available from Wells Fargo. The Wells Fargo Health Advantage Card, however, is only accepted for charges associated with hearing aids, eye surgery, dental work, and veterinary care. A considerably wider range of operations, including those involving weight loss and cosmetic surgery, as well as a broad “other” category, can be paid for using Synchrony’s CareCredit.
The uninsured or those who require care that is not covered by their plan may be able to swiftly pay for operations or medications by charging medical charges on credit cards. If certain requirements are met, the cards can provide discounts and lower APRs, which may appeal to customers. Hospitals value how quickly and easily payment is processed.
The senators’ letter, however, raised concerns about the context in which consumers are making their choice.
According to the letter, “the issue here is that the existing structure of our health care system frequently causes individuals to incur medical debt in order to get services they need.” “Within that setting, patients are being coerced into and then locked into medical credit cards despite the availability of alternative payment methods that may be more advantageous and offer lower interest rates,” the study’s authors write.
The letter also cited instances where patients paid interest that exceeded the cost of the operations they had, where APRs rose as high as 26.99%, and where some cards were immediately maxed out. The letter alleged that medical practitioners frequently utilize a very high “chargemaster” price as a starting point in talks with patients and insurance companies but infrequently receive payment from them. Patients using these cards were allegedly frequently billed at this amount.
The message continued, “If you pay 0% interest on a seriously inflated bill, it’s not a fair offer.”
The senators also expressed concern about the growing subprime debt and expressed worries that medical credit cards might be especially detrimental to credit scores, writing: “The cards may also adversely impact consumers’ credit reports because of the way credit reporting agencies treat them: the agencies recently agreed to remove 70% of medical debt from credit reports, but these changes will not benefit medical credit card holders.”
The letter finished by requesting responses to 16 questions from both Synchrony Financial and Wells Fargo, ranging from details on the quantity of medical credit card users and partners to the conditions of paid endorsement agreements with healthcare experts.
Both Wells Fargo and Senator Murphy’s office have yet to respond to requests for comment as of this writing.
A Synchrony spokeswoman stated that after engaging with the senators who initially sought the material by January 12, the business will submit further information on either January 26 or January 27.