*Vice President Kamala Harris has often spoken in personal terms about the impact of medical debt; having witnessed firsthand the burden it imposes during her mother’s battle with cancer. In keeping with her advocacy around medical debt, Vice President Kamala Harris convened several senior officials at the White House on Monday to announce steps the Biden-Harris administration is taking to alleviate the burden of medical debt on American families. The steps range from reducing the impact of medical debt in the calculation of creditworthiness, to helping veterans get access to medical debt forgiveness, and more.
While much of the political discussion around debt over the past few years has focused on student loan forgiveness, the largest source of debt in collections is medical debt. According to the White House, collections for medical debt are more than utilities, auto loans, and credit cards combined. One-third of U.S. adults have medical debt; with Black and Hispanic households 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 the “sacred obligation” to veterans, Veterans Affairs Deputy Secretary Donald Remy laid out additional ways the administration will provide them relief. The VA has already relieved over 1.5 million veterans of nearly $1 billion in copayments since the start of the pandemic. Also, out-of-pocket medical costs were eliminated for veterans with VA health care as a result of the American Rescue Plan. Beyond COVID-19 relief, Mr. Remy announced reforms to how VA medical debt can be forgiven.
The VA will implement a new streamlined request process that is easier and faster. Unlike before, veterans will soon be offered the ability to apply online for relief and will be subject to a simplified income threshold. The announced changes are expected to result in medical debt forgiveness for over half a million low-income American veterans.
Credit reports are playing an increasingly large role in the lives of all Americans. Not only are credit reports used to determine creditworthiness for loans, but they are also being used for background checks and during the job application process.
Director of the Consumer Financial Protection Bureau (CFPB) 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 creditworthiness decisions.
The VA will halt nearly all reporting of unfavorable medical debt to credit reporting agencies. OMB Director Shalanda Young remarked that her team has worked for several months with individual agencies across the administration to reduce the role of medical debt in accessing federal credit programs. Deputy Secretary Jewel Bronaugh announced that the USDA will cease including recurring medical debts into borrowers’ creditworthiness assessments for its rural homeownership lending programs.
The administration recognizes that the of impact medical debt goes beyond Americans seeking access to loans. As HHS Secretary Xavier Becerra laid out, those with medical debt are often faced with “making impossible choices” from not being able to afford to pay for medication, food, or rent as a result of their debts. A study found that medical debt deters half of those who have incurred it from seeking more care. Secretary Becerra announced his directive for HHS to evaluate how providers’ medical billing practices impact medical debt and take into account the provider practices in its grantmaking decisions.
Drawing upon her experience as California Attorney General and leading the charge on the Homeowners Bill of Rights, Vice President Kamala Harris emphasized new consumer protections. The CFPB is launching a public education campaign to help consumers understand their rights, like how to dispute a medical bill and file a complaint.
VP Harris also pledged that the administration will be going after “bad actors”. She detailed how some companies use intimidation and harassment to force consumers to pay medical debt; debt that in some cases has already been paid. She announced the CFPB will increase enforcement actions that hold medical providers and debt collectors accountable for harmful practices.
VP Harris was emphatic that for the Biden-Harris administration, protecting consumers is about more than protecting their bank accounts; it is about protecting their ability to focus their energy on recovery with dignity.