June 11, 2024 - Modern Healthcare
Josh Wingrove and Akayla Gardner, Bloomberg
President Joe Biden’s administration formally proposed a rule to bar medical debt from most individual credit reports on Tuesday, a move that will prevent major healthcare bills from negatively impacting borrowing.
Vice President Kamala Harris and Consumer Financial Protection Bureau Director Rohit Chopra announced the measure, which is expected to affect more than 15 million Americans, according to a White House fact sheet.
The administration estimates that beneficiaries could see their credit scores raised by an average of 20 points if the changes are enacted, and approximately 22,000 more mortgages could be approved each year.
The move is the latest effort from the administration to help lower costs for consumers ahead of November’s election rematch between Biden and Republican Donald Trump, in which inflation will be a key issue.
“No one should be denied access to economic opportunities simply because they experienced a medical emergency,” Harris told reporters on Tuesday, calling on states and local governments to take similar actions to reduce medical debt burdens.
The proposed rule will enter a public-comment period until Aug. 12. It would not take effect until early next year, likely placing it on the chopping block if Biden fails to win reelection. Republicans have been critical of debt-related policy actions under Biden, in particular his efforts to relieve student-loan debt for millions of borrowers.
The proposal has been percolating for months. The CFPB said last year it was working on the change. At the time, the agency was also looking to stop lenders from considering such debts when borrowers sought loans or other credit and curb certain repayment practices.
Three major credit-reporting agencies — TransUnion, Equifax Inc. and Experian Plc — have already voluntarily removed certain existing medical debt from credit reports.
Nonetheless, a CFPB report released in April found that medical bills appeared on the credit reports of 15 million Americans despite changes by those agencies, with more than $49 billion in outstanding medical debt in collections.
ABC News first reported the proposal.
(Updates with additional details throughout)
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