ROB SCHMITZ, HOST:
For years, medical debt has dragged down Americans' credit scores. The Biden administration has just proposed regulations to end that practice. Noam Levey with our partner KFF Health News reports.
NOAM LEVEY: A hundred million people in the U.S. have some form of health care debt. For many, it's a past-due bill on a credit report. That can sink a credit score and make it harder to buy a home, get a car, even land a job - but maybe not for long.
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VICE PRESIDENT KAMALA HARRIS: No one should be denied access to economic opportunities simply because they experienced a medical emergency.
LEVEY: That's Vice President Kamala Harris on a conference call with reporters, talking about new rules proposed by the Consumer Financial Protection Bureau. These rules would wipe current and future medical debts from consumer credit reports. To be clear, the rules won't eliminate the debt, so patients could still be pursued by collectors, even sued. Still...
MONA SHAH: This is a really big deal.
LEVEY: That's Mona Shah, a senior director at Community Catalyst. The nonprofit has worked to protect patients from medical debt. That debt undermines people's financial security and can keep them from the doctor, Shah says.
SHAH: It can be a deterrent for people to seek out health care, so there's a real fear factor.
LEVEY: In recent years, the three large credit rating agencies have removed smaller medical debts from credit reports and erased bills that have been paid off. But these actions have left out many patients with bigger debts. Fifteen million people still have medical debt on their record. That's according to an analysis from the Consumer Financial Protection Bureau. CFPB Director Rohit Chopra says, too often, these Americans are being hurt.
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ROHIT CHOPRA: The credit reporting system is more closely resembling a weapon for debt collectors.
LEVEY: Administration officials say under the new rules, both medical and dental bills would be removed. But debt collectors who oppose the regulations say they could have unintended consequences. Hospitals and physicians, for example, might require more patients to pay upfront. People have until August to submit comments about the proposed regulation, and administration officials say they plan to issue a final rule early next year. Depending on the outcome of the election, patients could see medical debts drop off their credit reports in early 2025. That could improve people's credit, raising their scores by an estimated 20 points on average.
I'm Noam Levey in Washington, D.C.
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SCHMITZ: That story comes to us from our partner KFF Health News.
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