Biden Administration Bans Credit Debt From Medical Reports

( – The Biden administration has approved a new rule that will hide medical debt when Americans get a credit report. The White House says the change will let more people buy cars and get mortgages. However, health industry experts are warning that it could push hospitals to ask for payment up front.

Harris Announces Rule Change

On June 11, Vice President Kamala Harris announced that the administration will soon ban credit check agencies from including medical debt in credit reports. According to Harris, over 100 million Americans have medical debt; she says the new rule will give millions of people a better credit score, by an average of 20 points, meaning they’re more likely to be approved for loans and should get better interest rates. She said the change will allow an estimated 22,000 more Americans to buy a home every year, by making mortgages more available.

This has all the earmarks of a desperate attempt to buy votes ahead of November’s presidential election — the rule change won’t go into effect immediately. Instead, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra said it would become law sometime next year if Biden wins re-election. The message is obvious; vote for us and get a better credit score. There’s no doubt medical debt is a serious issue in the US, though. The CFPB estimates that around 15 million people’s credit scores are being damaged by healthcare-related debt. But is this the best way to deal with the problem?

A Solution in Search of a Problem

First, all of the “big three” credit reference agencies — Equifax, Experian, and TransUnion — have already stopped considering medical debt when doing credit checks, so this initiative won’t actually change anything. Second, it’s likely to worry the healthcare industry. Although there’s more than $220 billion owed, the chances are most of that will never be paid off. Less than a quarter of medical debt is ever recovered.

The cost of that gets loaded onto everyone else’s insurance premiums, which is one reason health insurance is so expensive. Hospitals are worried that if medical debt doesn’t affect credit scores anymore it will be even harder to get the money back. Some hospitals are already asking for payment upfront for non-emergency procedures, and that’s likely to become more common.

This rule might win some votes, but it also opens the way for the Biden administration to write off medical debt. Harris said the administration has already forgiven $650 million in medical debt and plans to write off $7 billion more. It’s likely they plan to cancel it all –- leaving taxpayers with a $220 million bill.

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