WH Announces Measures to Reduce Medical Debt for Americans

The Biden-Harris administration announced Monday a four-party plan to “lighten the burden of medical debt” on American families, the White House said in a statement, a move the government hopes will give “more American families opportunity to thrive. ”

What You Need to Know

  • Biden-Harris government announced Monday a four-part plan to “lighten the burden of medical debt” on American families
  • Vice President Kamala Harris is set to detail the reforms in a speech from Washington on Monday afternoon.
  • A recent study by Kaiser Family Foundation found that nearly 23 million people owe $ 250 or more in medical debt
  • Reforms focus on four key areas, including accountability of healthcare providers and debt collectors, improving federal government fostering practices

Vice President Kamala Harris will detail the reforms in a speech in Washington on Monday afternoon.

Reforms focus on four key areas: accountability by health care providers and debt collectors, improving federal government sponsorship practices for those with medical debt, supporting veterans struggling with medical debt or other health and helping American consumers know and understand their rights when it comes to medical care.

“Medical debt is now the biggest source of debt and revenue – more than credit cards, utilities and car loans combined,” White House spokeswoman Jen Psaki told reporters earlier Monday. “Illness or caring for your loved ones should not mean financial hardship for American families.”

Medical debt is a problem that affects millions of Americans. A recent study by Kaiser Family Foundation found that nearly 23 million people – or nearly one in 10 adults in the United States – currently owe $ 250 or more on health-related expenses, defined as “significant medical debt,” by the agency.

Some 16 million people owe at least $ 1,000 in medical debt per KFF, with another 3 million owing more than $ 10,000. But the debt is not evenly distributed across all demographics, as Black Americans are “much more likely than people of other racial and ethnic backgrounds to report significant medical debt.”

To hold companies accountable, the Department of Health and Human Services is requesting data from more than 2,000 providers to evaluate information on collection practices, lawsuits, financial aid, debt market practices, and other factors that may affect access and financial accessibility of care and the accumulation of medical debt “, according to the White House.

“The ministry, for the first time, will weigh this information in its grants decisions, publish data and policy proposals to the public, and share possible breaches with the relevant law enforcement authorities,” the White House added.

Management also takes steps to ensure that the credit scores of people with medical debt do not suffer, based on a private sector announcement in mid-March by the country’s three major credit reporting agencies – Equifax, Experian and TransUnion – that they would deduct almost 70% of their medical debt from consumer credit reports.

From July 1, the paid medical debt will no longer be included in the credit reports. Currently, it can remain on reports for up to seven years, even after repayment.

Services also extend the time period from six months to one year before unpaid debt appears on credit reports, giving people more time to work with insurance companies or health care providers to resolve the debt.

And in the first half of 2023, Equifax, Experian and TransUnion will stop including medical debt under $ 500 in credit reports.

Monday’s government announcements “go beyond private sector announcements,” according to the White House, as it will provide guidance to all credit reporting agencies on how to remove medical debt as a factor. sponsorshipor the process by which a lender examines an applicant’s credit and decides whether to grant him a loan.

From Monday, the Ministry of Agriculture will stop including recurring medical debts when calculating borrower repayment options for its homeowner programs. “The Department of Veterans Affairs will also review the adoption guidelines to ensure that we minimize or eliminate medical debt reporting as a means of creditworthiness, where possible,” the White House said.

The VA has either canceled or reimbursed $ 1 billion in additional payments to veterans since the pandemic began, the administration said, and will now streamline the process for lower-income veterans seeking medical debt relief online.

Finally, the Office of Consumer Financial Protection is also launching an initiative to help all Americans understand the complex systems that make up medical bills and payments, and the agency encourages people who have problems with aggressive debt collection, compulsory credit reporting, or other credit reporting issues. complaints portal.

Spectrum News’s Ryan Chatelain contributed to this article.

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