Sep 22, 2023 -- 9:45AM, NY23 wrote:

Biden administration takes steps to remove medical bills from credit reports

The Biden administration wants to remove medical debt completely from consumer credit reports, so the Consumer Financial Protection Bureau on Thursday outlined its proposed rules to keep unpaid medical bills from affecting patient’s credit scores. One in 5 Americans have medical debt on their credit reports, according to the CFPB. Medical debt can lead to a debt spiral for some consumers and narrow their options for housing, loans and credit cards.

“We know credit scores determine whether a person can have economic health and wealth,” said Vice President Kamala Harris. “Credit scores determine whether a person can buy a home, whether they can buy a car, rent an apartment, or own a small business.” Medical debt is the most common debt in collection. The CFPB found that 58% of all third-party debt collection on consumer credit reports was for medical bills.

The complexity of medical billing also makes it prone to errors. One study from the Medical Billing Advocates of America estimates up to 80% of medical bills have mistakes. “These bills, even ones where the patient doesn’t owe anything further, can end up being reported on the patient’s credit report,” said Rohit Chopra, director of the CFPB, “and millions of people have spent millions of hours disputing these errors, often while dealing with serious illness.”

The CFPB outlined proposals to prohibit consumer reporting companies such as Equifax, TransUnion and Experian from including medical debts and collection information on consumer credit reports. As of July 2022, the companies no longer include medical debt in collection under $500 on credit reports. New rules would make that voluntary approach mandatory and extend to all medical debt.


Read more: www.cnbc.com/2023/09/21/biden-administra...

There is nothing to this idea but stupid.

Let's say, for example, that someone has $10,000 in medical debt that's in collection.  Should potential lenders know that this person has this debt when making a decision for credit?  Absolutely.

The after-effect of a rule like this is simple.  If it doesn't impact a credit score, people will choose to pay every last debt before medical debt, effectively crippling an industry that already struggles with the meager forced disbursements from Medicare and Medicaid.  Does this make any sense to anyone?  Of course not.

If there is a problem with the way medical debt is recorded and reported, then fix the problem.  Don't hide it from potential lenders who may end up making bad loans.  Didn't we learn in the Clinton Administration what happens with bad loans?