White House announces ban of medical debt from credit reports

Kamala Harris campaigns in New Hampshire. Keene^ NH - April 24^ 2019
Kamala Harris campaigns in New Hampshire. Keene^ NH - April 24^ 2019

The Biden administration has announced a rule to ban medical debt from credit reports of more than 15 million Americans, with Vice President Kamala Harris saying on Tuesday that the proposed rule would reduce the number of Americans with medical debt listed on their credit reports to zero (down from 46 million in 2020), as well as raise their credit scores by an average of 20 points and lead to the approval of about 22,000 more mortgages annually,

According to a fact sheet from the office of Vice President Harris, the move – taken through the Consumer Financial Protection Bureau (“CFPB”) – would help improve the financial health and wellbeing of millions of Americans. The Biden administration calculates that if implemented, the rule would raise affected individuals’ credit scores by an average of 20 points, and could lead to the approval of approximately 22,000 additional mortgages every year as a result of the cleaned-up credit reports. Following the proposal, the rule will be open to comments until August 12, 2024

CFPB Director Rohit Chopra said in a statement: “The CFPB is seeking to end the senseless practice of weaponizing the credit reporting system to coerce patients into paying medical bills that they do not owe.  Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans.”

Harris shared in a separate press release that the administration is also calling on states, local governments and health care providers to take additional steps to eliminate medical debt by using available federal funds to purchase and eliminate medical debt, prevent the further accumulation of medical debt and protect patients from aggressive debt collectors by expanding access to charity care.

According to an April report from the bureau, some 15 million Americans have a total of more than $49 billion in medical debt in collections.  Almost a quarter of middle-class Americans, or 17 million people, had unpaid health care bills in 2020.

00 is no longer included on credit reports.

Editorial credit: Maverick Pictures / Shutterstock.com

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