Biden Administration Announces Reforms To Ease Medical Debt, Increase Consumer Protection

As part of the fight to help Americans deal with high costs, the Biden Administration has announced reforms to ease the burden of medical debt and protect consumers from predatory collection policies.

The Secretary of the Department of Health and Human Services (HHS) Xavier Becerra is issuing a directive to evaluate how providers’ billing practices impact access and affordability of care and the accrual of medical debt. HHS will request data from more than 2,000 providers on medical bill collection practices, lawsuits against patients, financial assistance, financial product offerings, and third party contracting or debt buying practices.

The Department will weigh this information in their grantmaking decisions, publish topline data and policy recommendations for the public, and share potential violations with the relevant enforcement agencies of jurisdiction.

Separately, the Consumer Financial Protection Bureau (CFPB) will investigate credit reporting companies and debt collectors that violate patients’ and families’ rights, and hold violators accountable.

The Biden Administration is providing guidance to all agencies to eliminate medical debt as a factor for underwriting in credit programs.

The USDA said it plans to discontinue the inclusion of any recurring medical debts into borrower repayment calculations, which measure a borrower’s ability to repay for its homeownership programs—over $20 billion in lending activity.

Veterans Affairs (VA) will now make it easier and faster for lower-income veterans to get their VA medical debt forgiven.

The latest research finds that owing medical debt is not a reliable predictor of overall financial health. An analysis of 5 million anonymized credit records found that consumers who owed medical debt paid their bills at the same rate as those who did not.

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