By most estimates, roughly one in five American households are living with medical debts, which is a burden that affects families’ finances in a variety of difficult ways. In fact, as CNBC noted last year, medical debt “can lead to a debt spiral for some consumers and narrow their options for housing, loans and credit cards.”
With this in mind, the Biden administration’s Consumer Financial Protection Bureau launched an effort to remove medical debt from consumer credit reports altogether. The goal was obvious: The Democratic administration wants to help Americans keep unpaid medical bills from affecting their credit scores.
As NBC News reported, that policy is now advancing.
Vice President Kamala Harris said Tuesday that the proposed rule, released through the Consumer Financial Protection Bureau, would reduce the number of people in the U.S. with medical debt listed on their credit reports to zero, down from 46 million in 2020. … The administration calculates that if it is implemented, the rule would raise affected people’s credit scores by an average of 20 points and could lead to the approval of about 22,000 additional mortgages every year as a result of the cleaned-up credit reports.
“The CFPB is seeking to end the senseless practice of weaponizing the credit reporting system to coerce patients into paying medical bills that they do not owe,” CFPB Director Rohit Chopra said. “Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans.”
Given the way the federal rulemaking process works, the change won’t take effect until next year, but it’s nevertheless poised to be an important step that will help millions of U.S. households.
It’s also part of a larger pattern.
There’s a school of thought that says President Joe Biden and his White House team shouldn’t just focus on the major economic statistics — the low unemployment rate, the healthy GDP data, etc. — they also need to emphasize pocketbook issues. Typical Americans, the argument goes, probably have no idea how many jobs the economy created last month, but they have a sense of their own wallet.
What too often goes overlooked is the degree to which Biden and his administration have worked under the same assumptions. Indeed, the Democratic White House has practically been preoccupied with finding ways to help consumers. The Biden administration has, among other things:
- created new rules to benefit air travelers;
- made it easier for people to file their taxes for free;
- advanced a policy that would cap credit card late fees;
- taken steps to curtail tens of billions worth of surcharges that Biden accurately describes as “junk” fees,
- canceled $167 billion in student debt for nearly 5 million Americans through several programs;
- pursued policies designed to keep gas prices low.
Removing medical debt from consumer credit reports is very much a part of the larger policy mosaic. Biden can’t snap his fingers and make inflation go away, but he and his administration can give — and have given — consumers a break in a variety of other important ways.
None of these developments are likely to appear on front pages or at the top of the evening news, and no one seriously thinks CFPB reforms to credit reports are “sexy” enough to appear in re-election campaign ads.
But they’re worthwhile progressive measures that help regular people and their finances.
They’re also vulnerable to political shifts: Donald Trump didn’t support any of these policies while in office, and he’d likely reverse course on each of them in a prospective second term.
