On Tuesday (Jan. 7), Vice President Kamala Harris announced a new regulation by the Consumer Financial Protection Bureau (CFPB) to remove medical debt from all consumer credit reports. This decision marks a significant step in addressing the financial challenges posed by outstanding bills for scores of United States citizens.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” she expressed in a White House press release. “Today, we are building on this meaningful work by announcing an unprecedented final rule that will make it so medical debt is no longer included in your credit score. This will be life-changing 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.”
The CFPB estimated that this rule will remove $49 billion in medical debt currently reflected on credit reports, which will positively affect 15 million people within the country. The decision also builds on broader efforts by President Joe Biden’s administration, including the utilization of American Rescue Plan funds by states and localities to forgive over $1 billion in unpaid bills for more than 700,000 individuals. It added that, currently, “Jurisdictions are on track to eliminate roughly $15 billion in medical debt for up to nearly 6 million Americans.”
The announcement further explained how medical debt is not always a reflection of someone’s financial responsibility. “[It] is not like other forms of debt because it is often the result of unavoidable medical complications,” it explained before continuing, “Medical bills often contain significant errors, such as inflated or duplicative charges and fees for services never received or already paid.”