Vice President Kamala Harris has announced a new rule from the Consumer Financial Protection Bureau (CFPB) that will remove medical debt from consumer credit reports. This move aims to alleviate the financial burden on individuals and improve access to credit for home mortgages, car loans, and small business loans.
In addition to this announcement, Vice President Harris highlighted efforts by states and localities using American Rescue Plan funds to eliminate over $1 billion in medical debt for more than 700,000 Americans. These initiatives are part of a broader strategy to reduce medical debt burdens, with jurisdictions working towards eliminating approximately $15 billion in medical debt for nearly six million Americans.
"No one should be denied economic opportunity because they got sick or experienced a medical emergency," stated Vice President Harris. She emphasized the administration's commitment to reducing medical debt through various measures, including pathways to forgiveness and targeting predatory collection practices.
Medical debt affects over 100 million Americans and is the largest source of debt in collections. The CFPB's finalized rule will remove such debts from the credit reports of more than 15 million people, potentially raising their credit scores by an average of 20 points. This change could result in about 22,000 additional mortgage approvals annually.
The Biden-Harris Administration has been actively addressing medical debt through several initiatives. These include IRS steps ensuring non-profit hospitals provide required care discounts, VA streamlined processes for veteran debt relief, and Department of Defense proposals for fee reductions at military treatment facilities.
Furthermore, state programs like North Carolina's initiative aim to relieve up to $4 billion in existing medical debt for low- and middle-income residents while ensuring policies prevent future debts. Other states have also launched innovative programs with similar goals.
The administration's comprehensive approach includes various federal agencies working together on oversight and policy changes aimed at reducing the accumulation of medical debt and improving healthcare affordability across the country.
