Biden proposes removing medical debt from credit reports

The Biden administration on Tuesday proposed removing medical debt from the credit reports of more than 15 million Americans, which would allow them easier access to auto, home and small business loans.

The proposed rule, which will be subject to a public comment period, would not take effect immediately. It would prohibit health care providers from sharing medical debt with lenders and prohibit those providers from considering medical information when making loans.

Vice President Kamala Harris said the move would improve “the financial health and well-being of millions of Americans.”

“One of the most significant consequences of medical debt is the damage it does to a person’s credit score,” Ms. Harris said. “Medical debt makes it harder for millions of Americans to get a car loan, home loan or small business loan, which in turn makes it harder to get by. and even less to move forward. It’s just not fair.

Medical debt often looms large in Americans’ lives, with a estimated at 20 million owes more than $250 to health care providers. Black and Latino Americans are more likely to report unpaid bills, as are those who have low incomes or are uninsured. In surveysAmericans described taking out loans and working overtime to cover these debts.

As the economy and inflation have soured voters during President Biden’s first term, his administration’s efforts to contain costs have become the focus of his re-election campaign. His aides believe that measures such as reducing the prices of prescription products like insulin or inhalers are already felt by voters and will help improve the perception of Mr. Biden’s domestic agenda. The president has also relied on such economic achievements to convince voters of color – a base in his constituency – that he has implemented his racial equity agenda, even as more far-reaching proposals have been blocked by courts.

The policy likely won’t take effect until early next year, according to administration officials speaking on condition of anonymity to discuss details of the proposal. The public comment period runs until August 12.

Ms. Harris said the proposal was part of a broader White House effort to combat medical debt: The administration has canceled $650 million of it so far. The new policy will not relieve medical debt, nor will it end all aggressive collections tactics. This will only affect information about unpaid debts that health care providers have sold to collection agencies.

But the Biden administration plans to sell the rule as a way to help Americans achieve greater financial freedom.

Rohit Chopra, the director of the Consumer Financial Protection Bureau, said Tuesday that independent federal agency research in 2022, found that medical debt collections appeared on 43 million credit reports.

“It doesn’t eliminate consumers’ underlying medical debt,” Fredric said…

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