*Vice President Kamala Harris often spoke in personal terms about the impact of medical debt; having witnessed first-hand the burden this places during his mother’s battle with cancer. In keeping with her advocacy around medical debt, Vice President Kamala Harris summoned several senior officials to the White House on Monday to announce the steps the Biden-Harris administration is taking to ease the burden of medical debt on American families. The steps range from reducing the impact of medical debt in calculating creditworthiness to helping veterans access medical debt forgiveness, and more.
While much of the debt policy discussion in recent years has focused on student loan forgiveness, the biggest source of debt in collections is medical debt. According to the White House, medical debt collections are more than utilities, car loans and credit cards combined. A third of American adults have medical debt; with black and Hispanic households being disproportionately more likely to hold medical debt than white households. Through Monday’s event, the administration aimed to send the message to Americans that more help is on the way.
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Invoking “sacred obligation” to veterans, Assistant Secretary of Veterans Affairs Donald Remy outlined other ways the administration will provide relief. The VA has already relieved more than 1.5 million veterans of nearly $1 billion in copayments since the start of the pandemic. Also, out-of-pocket medical expenses were eliminated for veterans receiving VA health care as a result of the US bailout. Beyond COVID-19 relief, Mr. Remy announced reforms on how VA medical debt can be forgiven.
The VA will implement a new, simplified, simpler and faster application process. Unlike before, veterans will soon be offered the option to apply for help online and will be subject to a simplified income threshold. The announced changes are expected to result in the cancellation of medical debt for more than half a million low-income US veterans.
Credit reports play an increasingly important role in the lives of all Americans. Not only are credit reports used to determine loan worthiness, but they are also used for background checks and during the job application process.
Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra explained that 43 million Americans have medical debt on their credit reports. The administration announced several initiatives that will reduce the impact of medical debt on credit decisions.
The VA will stop almost all adverse medical debt reports to credit reporting agencies. OMB Director Shalanda Young noted that her team worked for several months with individual agencies across the administration to reduce the role of medical debt in accessing federal credit programs. Assistant Secretary Jewel Bronaugh announced that the USDA will stop including recurring medical debt in borrower credit ratings for its rural homeowner loan programs.
The administration recognizes that the impact of medical debt goes beyond Americans seeking access to loans. As HHS Secretary Xavier Becerra explained, people with medical debt often face “impossible choices” of not being able to afford medicine, food, or rent because of their debt. . A study found that medical debt deters half of those who have it from seeking more care. Secretary Becerra announced his directive to HHS to assess the impact of providers’ medical billing practices on medical debt and to consider providers’ practices in its grantmaking decisions.
Drawing on her experience as California attorney general and leading the charge on the homeowners’ bill of rights, Vice President Kamala Harris highlighted new consumer protections. The CFPB is launching a public education campaign to help consumers understand their rights, such as how to dispute a medical bill and file a complaint.
Vice President Harris also promised that the administration would go after “bad actors.” She detailed how some companies use intimidation and harassment to force consumers to pay their medical debt; debt which, in some cases, has already been paid. She announced that the CFPB will increase enforcement measures that hold medical providers and debt collectors accountable for harmful practices.
Vice President Harris insisted that for the Biden-Harris administration, protecting consumers is about more than protecting their bank accounts; it’s about protecting their ability to focus their energy on recovery with dignity.