Healing from surgery, an accident or a flare-up of a chronic illness is hard enough for a patient without the added stress of wondering what mounting health care expenses are doing to their credit rating. So it’s good news that credit reporting agencies soon will have to ease up on medical debt reporting — although the new practices aren’t the systemic change that’s needed.

Forty-three million Americans have medical debt that’s hurting their credit, according to the Consumer Financial Protection Bureau. Though the amount owed is relatively small — the average amount of medical debt in collections is $579, the bureau found, as opposed to $1,000 for nonmedical debt — the consequences can be significant. A bad credit report can keep someone from getting a car loan, a credit card, an apartment or a job.

So a federal rule taking effect Sept. 15 is a step forward for patients: To allow insurance payments to be processed, Equifax, Experian and TransUnion will be required to wait 180 days before disclosing medical debt on a credit report. The three will also have to remove medical debt from credit reports once it’s been paid by an insurer.

But these changes, which grew out of a 2015 consumer protection settlement, don’t get to the root of the problem: Health care costs are burgeoning, and health insurers are covering an ever-shrinking share of those expenses.

Out-of-pocket spending for people covered by employer-provided insurance has jumped 52 percent since 2010, Helaine Olen reported last month in The Atlantic. Half of all workers with employer coverage have to pay at least $1,000 before their insurance kicks in, Olen noted; of those with coverage through an Affordable Care Act exchange, almost 90 percent have a deductible of $1,300 for an individual or $2,600 for a family.

No wonder that a 2015 New York Times-Kaiser Family Foundation survey found that one out of five insured Americans under 65 had had problems paying their medical bills over the last year.

There is an upside — if you work for a crowdfunding platform like GoFundMe or YouCaring. About 46 percent of the $2 billion raised since GoFundMe launched in 2010 was for campaigns to raise donations to cover deductibles, co-pays, transportation, lodging and other patient costs, the company told the personal finance website NerdWallet last year. A NerdWallet analysis of four other crowdfunding platforms’ 2015 data found that “an average of 41 percent of campaigns were for medical costs.”

But only 11 percent of these campaigns were fully funded, according to the same NerdWallet study, making crowdfunding a losing popularity contest. For some of these patients, changes in how credit agencies handle medical debt promise a degree of relief — but they’re just a Band-Aid on a national affliction for which a remedy is nowhere in sight.

Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: