The Biden administration announced Tuesday it will be banning unpaid medical bills from appearing on credit reports.
Vice President Kamala Harris announced in a statement from the White House, a final rule by the Consumer Financial Protection Bureau will remove unpaid medical bills from consumer credit reports, in hopes it will reduce the burden of medical debt and allow consumers to gain access to home mortgages and other financial loans.
States and localities have used funds from the American Rescue Plan to support the elimination of over $1 billion in medical debt for around 700,000 Americans, with jurisdictions reportedly on track to eliminate a total of $15 billion in medical debt for over 6 million Americans.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Harris said in the statement, “That is why President Biden and I cancelled over $1 billion in medical debt — part of our overall plan to forgive $7 billion by 2026 — with support from our American Rescue Plan, legislation that I advanced with my tie-breaking vote in the Senate. We also reduced the burden of medical debt by increasing pathways to forgiveness and cracking down on predatory debt collection tactics.”
Harris said the rule change will be “lifechanging” for millions of Americans, making the pathway to financial assistance through loans far easier to get approved.
“This will be lifechanging for millions of families, making it easier for them to be approved for a car loan, a home loan, or a small-business loan. As someone who has spent my entire career fighting to protect consumers and lower medical bills, I know that our historic rule will help more Americans save money, build wealth, and thrive,” Harris said.
According to the statement, by 2026, a total of $7 billion in medical debt will be eliminated for roughly 3 million Americans. Additionally, hospital systems will be able to access enhanced Medicaid reimbursements through the State Directed Payments Healthcare Access and Stabilization Program.
Through the program, dating back to January 1, 2014, medical debt deemed uncollectable from individuals not enrolled in Medicaid with an income at or below 350% or whose debt is 5% of their yearly income will be eliminated. Unpaid debt for those enrolled in Medicaid within the same time period will also be eliminated.
