FACT SHEET: Biden-Harris Administration Announces New Actions to Reduce Medical Debt and Address Illegal Medical Debt Collection Practices
Vice President Harris announces actions to protect consumers and reduce hurdles that prevent individuals from receiving relief from medical bills
White House hosts roundtable with Americans impacted by medical debt, including those who received medical debt relief through Biden-Harris Administration actions
Today, Vice President Harris announced a series of actions by the Consumer Financial Protection Bureau (CFPB), Department of Defense (DOD), and Department of Health and Human Service (HHS) to increase pathways for medical debt relief, to address illegal actions by third-party debt collectors, and to improve our understanding of the impacts of medical debt.
Getting sick or taking care of loved ones should not create financial hardship for families. Yet, more than 100 million Americans struggle with medical debt. Over 40 million Americans —1 in 5 adults — owe around $88 billion in medical debt in collections, making it the largest source of debt in collections—more than credit cards, utilities, and auto loans.
That is unacceptable to President Biden and Vice President Harris. Vice President Harris has repeatedly highlighted the negative impacts of medical debt, noting that medical debt can stand in the way of someone’s dream to own a car, home, or small businesses. In June, Vice President Harris announced the CFPB’s proposed rule to remove medical debt from the consumer credit reports of more than 15 million Americans and called on states to take action to tackle medical debt. Following the Vice President’s call to action, HHS approved North Carolina’s innovative program to encourage hospitals to relieve medical debt and relieve approximately $4 billion in medical debt for nearly 2 million working families in North Carolina. Further, American Rescue Plan funds are being leveraged to eliminate an estimated $7 billion in medical debt for up to nearly 3 million Americans by the end of 2026.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency. That is why I have worked to cancel hundreds of millions in medical debt to date – part of our Administration’s overall plan to forgive $7 billion by 2026 – and make it so medical debt will soon no longer be included in your credit score,” said Vice President Harris. “As someone who has spent my entire career fighting to protect consumers, I am proud to announce today’s new actions to build on our work to reduce the burden of medical debt by increasing pathways for relief and cracking down on predatory debt collection tactics.”
To continue addressing the burden of medical debt, today the Vice President is announcing the following actions:
Holding Third-Party Debt Collectors Accountable
The Consumer Financial Protection Bureau (CFPB) released an Advisory Opinion on improper medical debt collections. The Advisory Opinion clarifies the responsibilities of debt collectors to confirm that debts are accurate, valid, and substantiated before engaging in collection actions. Further, the CFPB has stated that they will ensure fairness and increase transparency by cracking down on debt collectors that collect on debt that is not owed by patients.
CFPB also released a Consumer Advisory that explains to consumers what actions they can take when they suspect that they have been improperly billed or if they have had improper or illegal collection actions taken against them. The Consumer Advisory suggests actions such as: following-up with their provider if a bill looks incorrect, asking their provider for an itemized bill, negotiating bills if the price appears wrong, reporting to the CFPB if they have been improperly billed, and pursuing legal action if appropriate.
Increasing Pathways to Reduced Medical Bills
The Department of Defense has proposed a rule aimed at providing financial relief for civilians receiving medical care at military medical treatment facilities (MTFs). If finalized as proposed, this rule would implement fee reductions through a sliding scale discount program as well as catastrophic cap waivers. Through these measures, the DoD aims to significantly reduce the financial burden on patients while maintaining high-quality care and expanding the range of complex trauma cases that Department healthcare providers may encounter in both deployed and humanitarian settings.
Providing Transparency on Tax-Exempt Hospital Debt Collection Practices
CFPB released a blog post highlighting billing issues that occur when non-profit hospitals fail to provide financial assistance. Under the law, tax-exempt hospitals are required to offer financial assistance to help offset health care costs for low-income patients. However, the CFPB has previously found evidence that tax-exempt hospitals often bill and initiate collections against patients who have received or are eligible for financial assistance. Today’s blog post shines a light on bills wrongfully ending up in collections.
Better Understanding the Impact of Medical Debt on Seniors
HHS is collecting evidence and data to inform future actions to address the burden of medical debt. For the first time, the Center for Medicare and Medicaid Services added new questions on medical debt to their Medicare Current Beneficiary Survey (MCBS). The MCBS is an annual survey of people covered by Medicare to better understand their health care needs. These new questions will provide essential background on levels of medical debt carried by seniors and those with disabilities and the impacts of these debts on their day-to-day lives. The Agency for Health Care Research and Quality is also adding additional questions to the Medical Expenditure Panel Survey, one of the largest sources of data on health care in the United States, to capture more granular information on medical debt. Questions will capture information on the amount of medical debt, ability to pay unexpected medical bills, financial sacrifices that individuals may have had to make due to their health or treatment, and other aspects of medical debt and financial well-being. CFPB also recently spotlighted the legal challenges facing surviving spouses who are pursued for their spouse’s medical debt, providing insights into the ways debt collectors take advantage of this vulnerable population.
###
