Biden administration bans unpaid medical bills from appearing on credit reports
Biden administration bans unpaid medical bills from appearing on credit reports
Unpaid medical bills will no longer appear on credit reports, where they can block people from mortgages, car loans or small business loans.
How is this not bigger news?! This is life changing for a great many Americans.
I've known about this for a while and I still expect them to stop using collection agencies calling and start massive small claims court claims or something. I can't imagine this will slide with the current system as it is.
The CFPB said that medical debt is a poor predictor of an individual’s ability to repay a loan. Experian, Equifax and TransUnion, the three national credit reporting agencies, said last year that they were removing medical collections debt under $500 from U.S. consumer credit reports.
So even the credit reporting agencies are recognizing that medical debt isn't reflective of what the credit scores should be. Sounds like more evidence that there is a big problem with healthcare in this country.
Edit: I meant “credit reporting agencies” not “credit unions”
medical collections debt under $500
Who does this cover, like 20 people?
It’s kinda simple: in large cities you can legit just change doctor office and leave behind <500$ per place and just not pay. Most doctor offices are franchised or opened by large hospitals, so the chances of fucking over an individual doctor is pretty slim. In my state, they drop calling after a while and it just disappears once they write it off.
Every unpaid medical bill I have is under $500. Maybe 6 items? Credit reports aren't only calculating totals, they're looking at individual accounts. 6 bad marks is hella worse than 1, even if the totals are the same.
Medical collections debt under $500
Ah, so, none of them then. That's why this isn't news.
I don't know much about this situation, but it sounds like the reporting agencies took away debt under $500, but the new ban is for any medical debt, not just the debt under $500.
To be clear, that took place last year. This latest move appears much wider-reaching and categorical to any unpaid medical bills. According to the article:
Unpaid medical bills will no longer appear on credit reports, where they can block people from mortgages, car loans or small business loans, according to a final rule announced Tuesday by the Biden administration.
The Consumer Financial Protection Bureau rule will remove $49 billion in medical debt from the credit reports of more than 15 million Americans, according to the bureau, which means lenders will no longer be able to take that into consideration when deciding to issue a loan.
That was what the credit reporting agencies did, not what the Biden administration just did.
Edit: I meant "credit reporting agencies" not "credit unions"
people this is just crumbs
medical debt gets sold to debt buyers and once that is done it is just debt not medical debt and is not covered by the crumbs the Democrats are throwing
Even if it didn't, even if it worked exactly as intended, it doesn't fix anything. It just moves the problem. Now you're incentivized to focus on paying down other debts because medical debt doesn't hurt your credit. Now you're paying car payments, rent, student loan debt, credit cards, etc. first and medical debt last (if at all). Now hospital prices rocket even higher because even more people aren't making payments, insurance premiums soar further, and absolutely nothing is fixed. The system is broken and it's not because of credit scores.
We need to solve medical debt by addressing the source of the problem. Insurance. At minimum we need a public option. Better still, Medicare for all. Medical care should be socialized. Health is not capital. The threat of crippling debt or injury, disease and death without treatment should not be a profit generator for the protection racket that is insurance.
Basset Healthcare literally outsourced their
bummingbilling department to a debt collection agency. We waited months for a bill, found out they were in the process of switching and then got a very aggressive letter stating we were delinquent.:: Left the typo in there because it's technically correct.
Yes however medical debt is covered under hipa. When the debt agencies buy your medical debt they are violating hipa laws. There are a lot of strategies for eliminating this type of debt without ever paying it. Usually simply asking for debt verification is enough to get it removed from your credit report.
My strategy of literally ignoring collectors and sending all their calls to voicemail (for a surgery done in early 2023 in which I owed a couple thousand dollars) actually worked. I was called once a week or so for a little over a year and I haven't been contacted since June 2024.
I believe I was dinged on my credit score but the penalty was low single-digits, and it didn't affect my eligibility to buy a house. Your mileage will vary, and I definitely can't in good conscience recommend this as your first resort. Talk to a professional about risks and benefits of not paying certain debts if you can't or don't want to pay; some debts are not optional. But yeah, some are.
The strategy that seems to work the best is just to never interact with the debt from the start, it becomes almost impossible for them to collect.
This is the second time I've heard this in as many days... do you have any sources I could look at?
people this is just crumbs
And they say "vote blue matter who". No wonder liberals and left are losing in the past ten years. They abandoned the common folks instead of making drastic changes that actually alleviates the pressure of most ordinary folks. Never mind global inflation and its effects on incumbent governments, populism is clearly the way to go and that's why the both the right and far right is gaining ground. They know where the wind is heading while the liberals and left are still choosing to bury their heads in the sand.
Just give us Medicare for all. All of this does is shift the burden of unpaid bills to providers who in turn raises prices on everybody else.
Because spending bills need to originate in the House and pass the Senate.
If everyone else stopped paying, how long do you think it would take for them to move us to Medicare for All?
Yeah if that happened they'd just make it so it can be discharged through bankruptcy like student loans
Yeah, this isn't going to go the way people think it's going to go.
In an ideal world, yes. The medical debt would simply disappear and the providers would simply accept that they'll make slightly less profit overall. But that isn't the world we live in. That will never happen.
Providers are going to look at this uncollected debt and see it as unrealized profit. In their minds, they "deserve" to make $X million in profits, and if those unpaid bills cut into that, they are just going to raise prices accordingly (along with a little extra) to make up for it. This means that insurance companies will be paying more, and those who can afford to pay in the first place will be charged more as well.
Insurance companies are not going to allow this to stand either. Their increased costs (and a little extra on top for them) will be passed onto their customers in the form of higher premiums, higher deductibles, and less coverage. This will cause people to be priced out of the healthcare market and ultimately cause even more people to default on their medical bills, causing a feedback loop.
At the end of the day, those who are ultimately paying for health insurance and covering some of their costs out of pocket are going to end up paying a hell of a lot more, essentially subsidizing the people who are having their existing medical debt discharged. This feedback loop could very quickly spiral out of control, leaving hospitals without funding as people just decide to say "fuck it" and ignore their medical bills entirely since there's no consequence for doing so. This will cause providers and hospitals to close up shop, leaving the entire area worse off and with fewer options, further exacerbating the feedback loop.
If customers are ultimately not going to be held accountable for the debt, we need to switch to a universal healthcare system, because the system as it is isn't sustainable. If the government isn't going to pay, and the insurance companies aren't going to pay, and the customers either can't afford to pay or just don't bother to because they can't be held accountable, who's going to?
Providers are going to look at this uncollected debt and see it as unrealized profit. In their minds, they "deserve" to make $X million in profits, and if those unpaid bills cut into that, they are just going to raise prices accordingly
Lol, my dude. Providers have nothing to do with how much you are charged. As a "provider" the only association I have with your insurance or payment is to make sure I input the correct icd-10 codes.
Medicare largely sets the basic price for healthcare in the US because it's the largest insurance pool. If you are charged more or less than the Medicare allowable it's because your insurance company and a hospital administrator have made a contract behind closed doors.
if those unpaid bills cut into that, they are just going to raise prices accordingly (along with a little extra) to make up for it. This means that insurance companies will be paying more, and those who can afford to pay in the first place will be charged more as well.
We are already doing that for people who lack insurance and are therefore reliant on emergency medicine for basic healthcare needs. Most of a hospitals funding brought in by specialty departments like orthopedics goes directly into funding their emergency medicine departments. Uncollected co-pays or deductibles are just a drop in the bucket that most practitioners would love to write off if allowed (insurance companies mandate that we collect these to dissuade people from utilizing their insurance).
customers are ultimately not going to be held accountable for the debt, we need to switch to a universal healthcare system, because the system as it is isn't sustainable.
The system isn't sustainable as it is......Hence the extreme rise in cost for healthcare. Private insurance can only remain in solvency by denying care to their neediest subscribers, or by offloading them onto socialized systems when they become chronically ill.
the government isn't going to pay, and the insurance companies aren't going to pay, and the customers either can't afford to pay or just don't bother to because they can't be held accountable, who's going to?
It's almost like for profit healthcare is a bad idea.........
Because Trump is going to undo it right away.
The point of those things is that by doing that, he'll more directly impact his own supporters who likely vary the maturity of that debt in the gimme gimme red states that take a lot more than they contribute while complaining about nebulous "handouts" that really piss them off
Lighten up will ya
OP asked why it wasn't bigger news. I answered. It's a limited time deal.
While this is a good thing, holy hell does it show the absolutely horrible state of health care in the US. Medical bills that can ultimately end a life (in a financial sense) simply should not exist.
But we clearly can't fix the for-profit system, so we band-aid it by excluding the unpaid bills from credit reports.
Meanwhile, the incoming US President wants to fix health care by "privatization". Someone should let him know that the system is (mostly) privatized already, which is the entire problem.
(Edit: last bit /s. He clearly knows, but wants to make him and his cronies even more money)
How is this not bigger news?!
Americans are so propagandized and uninformed that we RE-ELECTED an anti-democratic felon rapist to be our leader. People don't know about this because their radicalized personalized feeds won't show them.
Yes, this is huge.
Yes, it's probably going to be the last good news we get from our political arena in a long, long time. Americans chose the path of regression. We won't see anything positive like this for the foreseeable future.
Biden's age isn't looking like too big of a deal now, is it? Especially since the rapist is essentially the same age.
Americans are so propagandized and uninformed that we RE-ELECTED an anti-democratic felon rapist to be our leader. People don’t know about this because their radicalized personalized feeds won’t show them.
This, Americans are so forgetful that they went from hating Trump and seeing him as the ultimate evil back to... thinking he was a "breath of fresh air, challenging the status quo" in four years
Yup. Americans are basically hamsters. Every day is a new day and you don't have to take the past into consideration. Just throw a dart at a board to decide your fate every day.
Yeah but thats only like 15% of people who have voted.
35% of voters were always going to vote for Trump, they never hated him.
That's nice! They told me I was going to be chosen to go to the moon. I didn't get to go, but they made a really good joke in my honor! So nice!
They didn't erase my partner's school loans but maybe they might send us a postage stamp in honor of school loan survivors?
Oh, good. This way we'll be able to borrow more money to try to pay off the medical debt and dig ourselves into a deeper hole. Perfect.
unpaid medical bill debts get sold off to buyers that are not medical companies so the debts will still appear on credit reports
Biden is just throwing crumbs around again and acting like he threw a banquet
typical Democrat behavior as usual
There are a number of states that forbid it limit this practice. Should I make some stupid comment about Republicans failing to mention context? Oops, I guess I did...
This is life changing for a great many Americans.
How is this "life changing"?
Like, do you understand this just results in people getting mortgages they can't afford?
It's not helping the housing crisis, it's not helping the healthcare crisis...
So to take it back to the first part of your comment:
How is this not bigger news?!
Because lots of people stopped immediately celebrating when the party tells them too. And started thinking what this type of shit actually does...
This just artificially inflates credit scores, like, I guess by now people don't remember the 08 mortgage crisis, but it really wasn't that long ago and this is setting us up for it.
Or maybe I'm wrong OP, so why do you think this is such a big deal?
The CFPB said that medical debt is a poor predictor of an individual’s ability to repay a loan.
Having emergency medical care makes one a poor credit risk? Medical care isn't a loan or contract we agree to having understood the terms. It is often thrust upon us.
And this has nothing to do with 2008. People with poor scores were getting variable-rate mortgages that later exploded past their ability to pay. How many times did you hear about payments going double, or more, what they had been? That exact thing happened to my first wife.
I only own a home because it's a Habitat for Humanity mortgage, which ignored my medical debt. If I could have magically removed my medical debt from my credit rating, my credit was perfect. This opens the opportunity to people in situations like mine was.
Medical care isn’t a loan or contract we agree to having understood the terms. It is often thrust upon us.
And needs to be paid back...
If you have $300/month that goes to medical debt, and that's not accounted for, you will get approved for a mortgage you can't afford...
That is what it has to do with 2008, the cause of the crash was people getting mortgages they can't afford...
Loaners want people's credit scores as high as possible, so people borrow more, and pay more interest.
You're focused on just the metric, and not what it's supposed to represent. Like bribing the proctor for an IQ test and claiming it legitimately makes you smart because the score is high. You got the metric high, but not what the metric represents.
Like, I can't think of a simpler way to explain this, I'm sorry if it's still not making sense to you, but I think someone else will have to help if this didn't work.
Oh, I didn't realize mortgages are the only thing affected by credit. Oh, wait, that's completely fucking stupid.