The Biden administration has announced a new rule banning credit reporting agencies from including medical debts in their reports, aiming to make it easier for people to access credit, such as loans and mortgages. The ban is part of a broader effort to reduce the burden of medical debt on Americans.
Under the new rule, medical providers will no longer report debt to credit agencies unless it has already gone into collections. This change could lead to an estimated $49 billion in medical bills being removed from the credit reports of about 15 million Americans.
The rule is seen as a positive step by advocates, who argue that it can improve people’s financial situations and encourage them to seek medical care. However, experts warn that simply removing medical debt from credit reports does not address the broader problem of continued medical debt.
Some critics, including Republicans in Congress and banking industry groups, have already spoken out against the rule, arguing that it could undermine underwriting processes and increase risk in the financial system. The future of the rule remains uncertain, as the Trump administration is expected to make significant changes to the Consumer Financial Protection Bureau (CFPB) leadership.
The new rule only addresses medical debt when it has already gone into collections, rather than preventing it from occurring in the first place. It is part of a constellation of federal, state, and local strategies aimed at reducing the burden of medical debt on Americans.
Source: https://www.vox.com/policy/393810/medical-debt-biden-credit-report-cfpb