512
submitted 5 months ago by MicroWave@lemmy.world to c/news@lemmy.world

The Biden administration is moving to ban medical debt from credit reports.

Vice President Kamala Harris said Tuesday that the proposed rule, taken through the Consumer Financial Protection Bureau, would reduce the number of Americans with medical debt listed on their credit reports to zero, down from 46 million in 2020.

In a press call Tuesday, Harris said the move would help improve the financial health and wellbeing of millions of Americans.

Medical debt, she said, "makes it more difficult to get by, much less get ahead. That is simply not fair."

The administration calculates that if implemented, the rule would raise affected individuals' credit scores by an average of 20 points, and could lead to the approval of approximately 22,000 additional mortgages every year as a result of the cleaned-up credit reports

A recent study estimated that one in five U.S. households live with medical debt, including people with health insurance; and that on average, a typical American household owes about $4,600 in medical debts.

you are viewing a single comment's thread
view the rest of the comments
[-] njm1314@lemmy.world 140 points 5 months ago

This is simply huge. I don't know if the average person knows how much this is going to affect Americans. It will have a massive positive benefit. I mean so much of my life was a struggle because of medical debt on my credit report, that should never have been there in the first place by the way. I'm thrilled by this this is a great change.

[-] restingboredface@sh.itjust.works 60 points 5 months ago

My credit got tanked years ago for a $95 doctor visit bill I was disputing that got sent to collections. Took me years to repair my credit. I spent most of my twenties with credit well below 600 and unable to get even small increases to my credit.

I hope this goes through and others don't have to deal with this kind of crap (or worse) because of the mess that is credit reporting.

[-] bhmnscmm@lemmy.world 4 points 5 months ago

Could you expand on why this makes such a big difference? I'm not very knowledgeable in this area. Is medical debt treated differently than other debts by lenders?

My first thought was that medical debt, like any other debt, has financial obligations that lenders would have to know about to determine the amount of credit a person is eligible for. Wouldn't medical debt payments impact the amount of additional debt you can afford?

[-] billiam0202@lemmy.world 48 points 5 months ago* (last edited 5 months ago)

The significant difference is that medical debt in the US is not usually elective. I can choose to sign up for a credit card, or I can choose to apply for a house/car loan, or I can choose to go to college, or I can choose to start a business. Are you gonna choose to ignore going to the ER when you break your arm, or are having chest pains, or are airlifted after a drunk driver T-bones your car? Are you gonna refuse your child's chemotherapy or dialysis treatments?

The US medical system is fucked up from top to bottom.

(Also note I'm not commenting on whether elective debt in the US is fair, only highlighting the difference between medical debt and other debts.)

[-] Today@lemmy.world 31 points 5 months ago

It ends up on your credit report while you're trying work it out between the hospital and the insurance company. Phone calls to one, phone calls to the other, and then, if you get it worked out, you have to file a claim with each credit reporting agency to get it removed. It's like a full time job. And, once you get it cleared up with the hospital, you have to do the same with every medical person involved.

[-] bhmnscmm@lemmy.world 8 points 5 months ago

Ah, that makes a lot of sense. Thanks for explaining. I've been fortunate enough to avoid major medical expenses or debt, so I hadn't thought of the situation you've described.

[-] scytale@lemm.ee 11 points 5 months ago

Someone correct me if I'm wrong, but similar to how you don't need to disclose alimony when applying for a mortgage, it's more on the type of debt. Yes it's still debt at the end of the day and certainly impacts your ability to pay a loan, but most reasonable people and proponents of universal healthcare push for it to not be considered a factor when assessing one's credit worthiness because of how destructive it is. Healthcare is something that cannot be avoided, unlike non-essential credit card debt from shopping for example.

I'm kinda rambling as I can't really say exactly what I want to say, but hopefully someone who can explain it better can chime in.

[-] chiliedogg@lemmy.world 0 points 5 months ago

It's not as huge as some people think. All 3 credit bureaus stopped reporting unpaid medical debt with an initial balance under $500 as of July 1, 2022, which is 70% of medical debt (when you have $15,000 of debt that's usually split 50 ways).

They also no longer report medical debt that has been paid - even if it is late. Additionally, debt collectors now have to wait a year to report you, giving you time to negotiate a more reasonable rate or have the debt discharged.

That's not to say this isn't good, but things have been improving massively on this front for the past few years. Reality is that with so much bullshit medical debt, the bureaus are going to have to either ignore it or nobody will be able to get a loan, which is worse for the banks than loaning out money to someone who had an unexpected 6-figure bill because their insurance sucks.

this post was submitted on 11 Jun 2024
512 points (98.5% liked)

News

23440 readers
483 users here now

Welcome to the News community!

Rules:

1. Be civil


Attack the argument, not the person. No racism/sexism/bigotry. Good faith argumentation only. This includes accusing another user of being a bot or paid actor. Trolling is uncivil and is grounds for removal and/or a community ban. Do not respond to rule-breaking content; report it and move on.


2. All posts should contain a source (url) that is as reliable and unbiased as possible and must only contain one link.


Obvious right or left wing sources will be removed at the mods discretion. We have an actively updated blocklist, which you can see here: https://lemmy.world/post/2246130 if you feel like any website is missing, contact the mods. Supporting links can be added in comments or posted seperately but not to the post body.


3. No bots, spam or self-promotion.


Only approved bots, which follow the guidelines for bots set by the instance, are allowed.


4. Post titles should be the same as the article used as source.


Posts which titles don’t match the source won’t be removed, but the autoMod will notify you, and if your title misrepresents the original article, the post will be deleted. If the site changed their headline, the bot might still contact you, just ignore it, we won’t delete your post.


5. Only recent news is allowed.


Posts must be news from the most recent 30 days.


6. All posts must be news articles.


No opinion pieces, Listicles, editorials or celebrity gossip is allowed. All posts will be judged on a case-by-case basis.


7. No duplicate posts.


If a source you used was already posted by someone else, the autoMod will leave a message. Please remove your post if the autoMod is correct. If the post that matches your post is very old, we refer you to rule 5.


8. Misinformation is prohibited.


Misinformation / propaganda is strictly prohibited. Any comment or post containing or linking to misinformation will be removed. If you feel that your post has been removed in error, credible sources must be provided.


9. No link shorteners.


The auto mod will contact you if a link shortener is detected, please delete your post if they are right.


10. Don't copy entire article in your post body


For copyright reasons, you are not allowed to copy an entire article into your post body. This is an instance wide rule, that is strictly enforced in this community.

founded 2 years ago
MODERATORS