Harris says White House will seek to ease Americans' medical debt burden

CNN/Stylemagazine.com Newswire | 4/11/2022, 1:41 p.m.
The White House is seeking to help lessen Americans' medical debt burden, Vice President Kamala Harris is set to announce …
Hospital patients are seen being moved between wings at a New York hospital in February, in New York. The White House is seeking to help lessen Americans' medical debt burden, Vice President Kamala Harris is set to announce on April 11. Mandatory Credit: Luiz C. Ribeiro/New York Daily News/Tribune News Service/Getty Images

Originally Published: 11 APR 22 12:56 ET

Updated: 11 APR 22 12:57 ET

By Tami Luhby, CNN

(CNN) -- The White House is seeking to help lessen Americans' medical debt burden, Vice President Kamala Harris is set to announce Monday.

In its latest effort to help people deal with increased costs amid skyrocketing inflation, the White House laid out a four-point plan to help protect consumers in a fact sheet released ahead of the formal announcement. It builds on President Joe Biden's recent executive order on increasing access to affordable health care coverage.

Harris will deliver remarks about the effort on Monday afternoon.

Medical debt plagues 1 in 3 Americans and is the largest source of debt in collections, according to the White House. Black and Hispanic families are more likely to hold medical debt than White ones. Being behind in bills also prompts some people to avoid seeking additional health care and can affect consumers' ability to buy homes or start small businesses.

White House effort

The administration's actions include having the Department of Health and Human Services evaluate how providers' billing practices impact access and affordability of care and the accrual of medical debt. It will request data from 2,000 providers on their collection efforts, lawsuits against patients, financial assistance offerings and other practices.

For the first time, the agency will weigh this information in its grant-making decisions, publish top-line data and policy recommendations for the public and share potential violations with relevant enforcement agencies.

Also, the Consumer Financial Protection Bureau will investigate credit reporting companies and debt collectors that violate patients' and families' rights. It will bolster its consumer education tools aimed at helping Americans navigate medical billing and accessing financial assistance.

The bureau issued a bulletin in January aimed at preventing unlawful medical debt collection and credit reporting. Recent research from the CFPB shows that Americans had racked up $88 billion in medical debt on consumer credit records as of June 2021.

In addition, the White House is providing guidance to federal agencies to eliminate medical debt as an underwriting factor in credit programs, where possible. The US Department of Agriculture will no longer include any recurring medical debts in borrower repayment calculations.

The Department of Veterans Affairs has taken several steps, including finalizing a rule to virtually cease reporting of medical debt for veterans with VA Care bills, according to the White House. And the agency will now make it easier for lower-income veterans to get their VA medical debt forgiven, including streamlining the request process, offering an online application and setting a simple qualifying income threshold. This could help more than half a million veterans get relief.

Credit agencies ease reporting

The White House actions follow a decision last month by the three largest credit reporting agencies -- Equifax, Experian and TransUnion -- to remove nearly 70% of medical debt from consumer credit reports.

Starting July 1, the agencies will no longer include medical debt that went to collections on consumer credit reports once it has been paid off. That will eliminate billions of dollars of debt on consumer records.

In addition, unpaid medical collection debt won't appear on credit reports for the first year, whereas the previous grace period was six months, the three companies said. That will give people more time to work with their health insurers or providers to address the bills.

And starting in the first half of 2023, medical collection debt of less than $500 will no longer be included on credit reports.