The Biden administration has announced plans to formulate federal rules to prevent unpaid medical bills from impacting patients’ credit scores, possibly benefiting tens of millions of Americans.
Driving the news: Regulations to bar unpaid medical bills from affecting credit scores were announced on Thursday, with the creation of these regulations due to begin next year.
* Vice President Kamala Harris and Rohit Chopra, head of the Consumer Financial Protection Bureau (CFPB), stated that these measures would improve the credit scores of millions of Americans.
* This step, expected to face industry opposition, represents significant federal action to combat medical debt that burdens about 100 million people.
What this means: The regulations target medical debt, which often forces individuals into difficult circumstances and does not accurately reflect a borrower’s creditworthiness.
* According to a KFF Health News-NPR investigation, medical debt causes many to take on extra work, relinquish their homes, and restrict food and other essentials.
* CFPB researchers have found that medical debt does not predict creditworthiness effectively, casting doubts on its relevance on a credit report.
Yes but: Some warn the ban could have assorted unintended consequences.
* Hospital leaders and representatives of the debt collection industry warn that such restrictions may lead more hospitals and physicians to demand upfront payment before delivering care.
* Critics caution that looser credit requirements might enable consumers who are ill-equipped to manage more debt to obtain loans they may struggle to repay.
Reactions: While many patients’ and consumer groups praise the move, it is likely to spark industry opposition.
* Emily Stewart, executive director of Community Catalyst, hailed the decision as a significant milestone in collective efforts that would provide immediate relief to those unfairly impacted by medical debt.
* However, others such as Scott Purcell, chief executive of ACA International, criticize the decision, arguing there could be numerous repercussions if medical providers are singled out in their billing.
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