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Vice President Kamala Harris announced this week that the federal government is taking a number of new measures to help those affected by medical debt.
Joining cabinet members and other federal officials at the White House, Harris spoke about the pressures and fears of medical debt.
“Many people have been hospitalized because their appendix has ruptured or they have had a bad fall and who are still paying their bills year after year,” Harris said in a White House comment.
“Parents sitting in the hospital parking lot are afraid to bring their child through the sliding glass door of the emergency room because they knew that if they walked through the sliding glass door they could have thousands of dollars which they do not have.”
The administration’s new measures could help reduce the burden of medical debt that Americans already have – reducing the risk of Americans being overwhelmed by high medical bills they can’t afford in the first place, said Jennifer Bosco, a staff attorney at National Consumer Law Center, a nonprofit that Speaks for economic security for low-income people.
Bosco’s organization has been working for some time to combat “abusive and aggressive” medical debt collection. The NPR asked Bosco to explain his views on the activities announced by the White House and how they could help and what is still missing.
This interview has been edited for length and clarity
What was your reaction to the White House medical loan announcement, and what parts do you think would be helpful to consumers, including the loan?
I was really pleased to see this announcement and the recent steps taken by the administration. I think they’ve been quite creative in finding out what can be done with the power of the executive branch to really help consumers.
It’s great to see that the CFPB, the Consumer Financial Protection Bureau, is really moving forward and focusing somewhat on medical loans. And they released a report on medical debt earlier this year that found that the country has about $ 88 billion in medical debt on credit report, and that burden falls even heavier on black families and Latino families.
One of the things that can really help consumers here is changing the rules regarding medical loan reporting, and then the announcement from the three major credit bureaus that they are going to drastically reduce how much medical credit goes into the credit report.
When medical loans show up in credit reports and credit scores, it doesn’t predict how much credit people will get because it’s not like a regular purchase, it’s a different entity. Sometimes it’s even a collection strategy – debt collectors know that people want to clear it from their credit report and [so they] It will pay for the settlement of medical debts.
So I think it’s great news that most consumers who have medical debt will not be penalized for appearing in their credit report.
Of course, just because it doesn’t appear on your credit report doesn’t mean you don’t have to. There is still the problem of consumers being able to pay for healthcare. So it will not eliminate the medical debt, but it will eliminate some of the consequences associated with it.
You can walk us through some big highlights from This week’s announcement?
First, the CFPB issued a bulletin to creditors and credit reporting agencies about new protections against surprise billing – the No Surprise Act – reminding credit reporting agencies and creditors to be very, very careful to make sure. Not trying to raise debt prohibited by the No Surprise Act.
Veterans Affairs Medical has announced a plan to facilitate debt forgiveness – details that have yet to be worked out. The VA has also announced that it has changed how it is going to report clinical debt for future credit reporting purposes.
The Department of Health and Human Services has announced that it is aggressively enforcing the No Surprise Act, which will protect consumers from many types of surprise billing. It doesn’t capture all kinds of wonderful billing. In this case, [it] There is no protection applicable to ground ambulance services, but overall, it is a great development.
There was another announcement that was really encouraging to see [Federal Housing Finance Agency] Announced that it is looking at the credit models that Fannie Mae and Freddie Mac use for lending and that medical loans will not be counted against customers as they were in the past.
Your organization has worked on the issue Debt and veterans Before – can you explain more about what happened on that front?
We are consulting with the administration to see how much medical debt is actually owed by the federal government. Are there ways that can be forgiven? And so we’re glad to see that VA is taking some steps to do that.
Veterans [Health] The administration has announced that it will stop reporting about 90% of previously reported medical loans. They are committed to doing so and to streamline the process that people can use to forgive their medical debts. There is an administrative process for those who are struggling with VA medical loans, but it is very difficult and it is not clear how to access it.
It’s great to see that the federal government is going to say these steps: this is an area where we can help people who have medical debt and forgive it in certain circumstances.
The government has also announced that it is collecting and disseminating information to providers with aggressive billing practices. I realize that data is really hard to come by right now?
We don’t really have a good look at what’s happening nationally. How many people are facing lawsuits due to medical loans, wage garnishment, liens in their homes? We do not know which hospitals are necessarily contracting or selling loans or approving the use of these aggressive collection activities.
I think it’s great that HHS will need that level of reporting and really start to see what hospitals and debt collectors are doing. It can give us a better picture of how consumers are feeling and help us figure out how to fix some of the bad aspects of this problem.
Often those who sue for medical loans or have their wages adjusted – it’s not that they don’t want to pay their medical debts, they just can’t pay. And in many cases, they are patients who should have been eligible for financial aid or any other form of financial assistance, perhaps Medicaid, and instead they face a lawsuit. It could help solve that problem: How well are we doing in screening low-income patients so that they have other resources to help them afford their medical expenses?
It is also important to try to get a picture of what these debt collections mean on the bottom line of the hospital, as reports from a few states … This is not something where hospitals can balance over 0.2% of their budgets on wages garnishments and debt collection lawsuits. So I think it would be important to get that information.
Apart from this new announcement, what other policy changes could create a big hole in the medical debt problem?
You can have lots and lots of debt protection for consumers, which will help when medical loans are accumulated. But I think we really need to look at this: what can we do to make sure that medical loans do not accumulate in the first place?
While this is not a common consumer law issue, I think that expanding Medicaid to states that have not yet expanded Medicaid would be extremely helpful for residents of states with high levels of medical credit. And those southeastern centralized states – states with higher black populations than many states that have expanded Medicaid – are exacerbating racial inequalities in those areas.
Under the Affordable Care Act, there is a requirement that nonprofit hospitals provide financial assistance to low-income patients. It was implemented by the IRS, but it was a challenge to catch the problem. And we’ve heard that there are many hospitals that have a financial aid policy on books, but don’t do a good job of letting patients know that this is an option.
This is another way to get to the root of the problem: identify patients who simply can’t afford to pay and instead of chasing year after year for their medical loans that are really ineligible, [ask] What can we do instead of helping these people?
Other steps can be taken. The CFPB is looking into whether medical credit should be included in the credit report at all. There may also be some strong protections against borrowing for certain types of loans, as was the case with some COVID-19 treatment laws. Should there be special rules for COVID-19 related loans to prevent aggressive collection activities? Or if there is a medical loan, should there be a ban on the sale of the loan to the loan buyers?
Finally, I think the problem of medical debt will not be solved unless at some point in the future of our country we adopt a single payer or Medicare-for-all system. But I think at the moment it’s a blue sky concept.