White House announces plan to erase medical debt from credit reports

 June 12, 2024

In a major development, the White House announced a plan week this week to erase medical debt from credit reports. 

According to ABC News, details of the plan were explained during a recent interview with Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra.

"People's credit scores are being unjustly and inappropriately harmed"

"This is going to be an enormous relief to so many people battling bills when it comes to hospital visits," Chopra said of the change, which is slated to take effect in early 2025.

"Our research shows that medical bills on your credit report aren't even predictive of whether you'll repay another type of loan," Chopra insisted.

"That means people's credit scores are being unjustly and inappropriately harmed by this practice," the Biden administration went on to add.

Critics warn that patients will be harmed by stricter payment rules

ABC News noted that Vice President Kamala Harris also touted credit report reform when speaking with reporters during a conference call on Tuesday, calling the current situation "simply not fair."

"Medical debt makes it more difficult for millions of Americans to be approved for a car loan, a home loan or small business loan, all of which in turn makes it more difficult to just get by, much less get ahead," Harris

Yet critics like Johns Hopkins University professor Ge Bai maintain that removing medical debt from credit reports could end up harming patients as hospitals seek out ways to recoup costs by adopting stricter payment rules.

"I think in the short run, it will be great news for patients, and probably we'll see patient advocacy groups pushing it," Bai told ABC News.

"However, I think in the long-run, when the long-term negative effects emerge, probably we're going to see more pushback," the academic predicted.

Collection advocate says health care costs will rise

Similar concerns were raised in a statement provided to ABC News by Association of Credit and Collection Professionals CEO Scott Purcell.

Purcell warned that the change will bring about "a broad negative impact on businesses, health care providers, patients and consumers."

He argued that "by suppressing information about a consumer's debt, this will increase the cost of medical care and force more upfront payments."

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