Federal officials announce plan to reduce hardships of medical debt

Federal regulators will use a four-part strategy to help patients deal with medical and health care debt.

Vice President Kamala Harris and Xavier Becerra, secretary of the Department of Health and Human Services (HHS), announced the new actions involving HHS, along with Consumer Financial Protection Bureau (CFPB), the Departments of Agriculture and Veterans Affairs (VA), and the federal Small Business Administration and Federal Housing Finance Agency.

The announcement came four days after the U.S. Census Bureau published the finding that 19% of U.S. households could not afford to pay for medical care up front or when they received it in 2017. The Bureau cited the 2018 Survey of Income and Program Participation.

The rising cost of living is one of the biggest challenges facing families today, and President Joe Biden’s administration is committed to helping lower their monthly bills, Harris said in the press conference announcing the plan. She cited examples such as parents pondering whether they can afford health care for sick children, or older people cutting pills in half to make prescriptions last longer.

“No one in our nation should have to go bankrupt just to get the health care they need and that is why our administration is prioritizing this issue of medical debt,” Harris said in the press conference.

The plan includes:

• Holding medical providers and debt collectors accountable for harmful practices.

HHS will request data from providers on medical bill collection practices and consider the information for future grants and share potential violations with relevant enforcement agencies. The CFPB will target coercive credit reporting and determine if unpaid medical bill information should be included in credit reports.

• Reducing the role that medical debt plays in determining whether Americans can access credit. The move will open up new opportunities for people with medical debt to buy a home or get a small business loan, according to the administration.

Credit reporting agencies Equifax, Experian, and Transunion have announced they will no longer include certain forms of medical debt on credit reports, removing billions of dollars in debt from consumer reports. The Biden-Harris Administration is directing federal agencies to eliminate medical debt as a factor for underwriting in credit programs, whenever possible.

• Helping more than half a million of low-income American veterans get their medical debt forgiven. The VA will make it easier and faster for lower-income veterans to get their VA medical debt forgiven.
• Informing consumers of their rights. The CFPB has informationto help patients and their families confronting medical billing and collections at consumerfinance.gov.

“Black and Hispanic households are more likely to hold medical debt than white households,” the White House statement said. “Medical debt is not just a financial issue -- it can have negative health effects too. One study found that almost half of individuals with medical debt intentionally avoided seeking care.

“Getting sick or taking care of loved ones should not mean financial hardship for American families.”