The Biden Administration Takes Aim at Medical Debt, Proposing Rules to Protect Consumers
On Thursday, the Biden administration unveiled a major initiative aimed at shielding Americans from the burden of medical debt. The proposed federal regulations would prohibit unpaid medical bills from negatively impacting patients’ credit scores, potentially benefiting tens of millions of individuals.
Medical debt has long been a pervasive issue in the United States, affecting roughly 100 million people, according to a KFF Health News-NPR investigation. The weight of medical debt often forces individuals to take on additional work, lose their homes, and even ration essential items like food.
To address this crisis, Vice President Kamala Harris, accompanied by Rohit Chopra, head of the Consumer Financial Protection Bureau (CFPB), announced the new measures. The CFPB will be responsible for developing the regulations, which are expected to be realized next year.
While these proposed rules may provide relief to those burdened by medical debt, they are likely to face opposition from the healthcare industry. Credit reporting has been a common tactic used by hospitals to encourage patients to pay their bills, and any restrictions on this practice may be met with resistance.
Furthermore, the future of the CFPB itself is uncertain due to a case before the conservative-majority Supreme Court, which has been limiting federal regulatory powers. The agency was established in response to the 2008 financial crisis.
However, patients’ and consumer groups have applauded the Biden administration’s initiative. Emily Stewart, executive director of the Boston nonprofit Community Catalyst, remarked that it is an “important milestone” in the fight against medical debt.
Credit reporting based on medical debt has significant consequences for individuals, including limited access to housing and an increased risk of homelessness. It is also worth noting that medical debt does not accurately predict a consumer’s creditworthiness, according to the CFPB’s research.
While the three largest credit agencies – Equifax, Experian, and TransUnion – stopped including certain medical debt on credit reports last year, millions of patients with larger medical bills were still affected. This spurred consumer and patient advocates to call for stronger federal action, leading to the Biden administration’s current proposals.
The issue of medical debt has also been addressed at the state level. In Colorado, for example, a groundbreaking bill was passed in June that prevents medical debt from being included on residents’ credit reports or factored into their credit scores.
However, opponents argue that restrictions on medical providers’ ability to collect payment may have unintended consequences, such as prompting hospitals to require upfront payment before providing care. Additionally, there are concerns that loosening credit requirements could lead consumers to take on more debt than they can handle.
The Biden administration’s announcement is a significant step in tackling the complex issue of medical debt, but its implementation and potential opposition from industry stakeholders remain to be seen.
About this project:
The news article is part of the “Diagnosis: Debt” reporting partnership between KFF Health News and NPR. The project explores the scale, impact, and causes of medical debt in America. It is based on extensive research, including polling, court records, federal data on hospital finances, and investigations into financial assistance and collection policies of more than 500 hospitals across the country. The project also involved collaboration with research organizations, such as the Urban Institute and the JPMorgan Chase Institute, as well as interviews with patients, physicians, consumer advocates, and industry leaders.