Last year, the three major credit bureaus in the United States – Experian, Equifax, and TransUnion – have announced plans to remove medical debt from credit scores. The move would provide relief to millions of Americans financially burdened by healthcare costs and would improve the credit scores of those affected, resulting in better lending terms and opportunities.
Vice President Kamala Harris addressed the subject during a recent teleconference, sharing that she had met with families from across the nation who suffering under the weight of medical debt.
“President Biden and I are firm in the belief that access to healthcare should be a right and not a privilege just for those who can afford it. And that means that no one in our nation should have to go into debt just to get the quality healthcare that they need,” Harris said.
“Right now, in our country, one in three adults — some 100 million Americans — struggle with unpaid medical bills,” the Vice President continued. “They just can’t afford those bills. A disproportionate number are Black, Latino, or live in rural areas. Many of these debts people have accrued are due to a medical emergency — a student with a burst appendix, a grandmother who took a nasty fall — and, years later, they are still paying off tens of thousands of dollars in bills that they didn’t plan to have.
“For years, this medical debt has also harmed people’s credit scores. And this is a point of emphasis: We know credit scores determine whether a person can have economic health and well — well-being, much less the ability to grow their wealth. Because think about it: Credit scores determine whether a person can buy a home, whether they can buy a car, rent an apartment, or own a small business.”
Harris said she had focused on the issue since taking office, ensuring that consumers knew they had the right to contest inaccurate charges on their medical bills, while also cracking down on debt collectors who threaten, harass, and deceive consumers, and directing consumers on how to file a dispute.
“We cancelled or refunded about $1 billion in copays for more than one and a half million veterans, and we continue to work to bring down the cost of healthcare,” she reported.
According to the Consumer Financial Protection Bureau’s (CFPB) 2022 Medical Debt Burden in the United States Report, $88 billion of outstanding medical bills are currently in collections – affecting one in five Americans.
In fact, medical debt is the most common collection type reported on consumer credit records, and consumers report being contacted by debt collectors about medical debt more than any other type of debt.
To that end, the CFPB has proposals under consideration that would help families financially recover from medical crises, stop debt collectors from coercing people into paying bills they may not even owe, and ensuring that creditors are not relying on data that is often plagued with inaccuracies and mistakes.
“When someone gets sick, they should be able to focus on getting better, rather than fighting debt collectors trying to extort them into paying bills they may not even owe,” said CFPB Director Rohit Chopra.
In July, the CFPB met with and listened to people from across the country on the impact poor medical billing practices and coercive credit reporting have on patients and families. The CFPB, in partnership with other agencies, is currently reviewing information submitted by the public on medical billing practices, including high-cost specialty financial products such as medical credit cards and installment loans. However, the CFPB continues to receive complaints from the public about illegal debt collection and credit reporting practices related to medical billing.
If one cannot afford to pay certain hospital or medical bills, depending on your income, they may be entitled to free or reduced care. Uninsured patients or patients with high medical costs who are at or below 400 percent of the federal poverty level are eligible to apply for a hospital’s charity care or discount payment policy. Charity care is available even when your bill is past due. Hospitals cannot sell your patient debt to a debt buyer unless you are ineligible for financial assistance, or you have not responded to a hospital’s attempt to offer assistance for 180 days.
Hospitals are required to provide a specific notice before transferring a hospital debt to a debt collector. The notice should include a copy of an application for free or reduced care under that hospital’s policy. In their first written communication, debt collectors are also required to send a copy of the notice.
If the Biden administration has its way, consumer reporting companies would be blocked from using medical debts and collection information on consumer reports. Creditors would also be barred from using medical debt for underwriting decisions and debt collectors would no longer be able to use what the CFPB referred to as “coercive collection practice.”