In what would mark a significant change to the country’s financial landscape, the Consumer Financial Protection Bureau (CFPB) is advancing a sweeping proposal to prohibit the inclusion of medical debt in consumer credit reports.
The rules change, championed by the Biden administration as a major win for consumers, would build on previous efforts that saw credit bureaus last year cease the reporting of medical debt under $500. However, while some officials argue that the measure will ease the burdens of struggling Americans, one expert warns that the bureau could be steering the country toward a financial precipice.
“The conversation is about our economy,” says Melissa Nash. “It’s going to be the demise of our economy and our country at the same time.”
~Melissa Nash
Nash has over 30 years of experience in finance, having founded her company Checkmark Collections in 2007. The author of two books on the collections industry, Nash, says she is in the business of keeping the economy running, often working with small business owners to recover lost revenue.
But Nash says the CFPB is moving ahead with a plan that could make matters difficult for her industry, as well as upend the nation’s healthcare system.
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In a letter published last month, U.S. Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and John Fetterman (D-PA) officially urged the bureau to prohibit credit reporting on medical debt. The trio wrote that the measure would “help address the burden of medical debt on working families,” but others argue the rules change misses the mark. Critics say that without any specific tailoring to those in need, the new system would be rife with abuse, with many well-off patients simply opting out of their bills.
“It’s a balancing act. When we’re talking to somebody on the phone, I have to determine pretty quickly: Is this the family that needs some empathy and some time? And do I need to put you on a $15-month payment plan? Or are you the rich, wealthy person who’s just like, ‘Oh, you can’t do anything to me. I’m not paying this bill.’ My job is to find out which person you are.
~Melissa Nash
Industry trade group ACA International shares Nash’s perspective. They say that the expected rules change will severely handicap collectors’ ability to collect revenue for healthcare providers—the result: a nationwide decline in the quality of coverage.
“The blind belief that the health care community can absorb financial shocks of that nature is misguided and could lead to disastrous outcomes for consumers.”
~ ACA International
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Medical debt currently accounts for roughly $88 billion in consumer debt and is the most common form of debt reported in consumers’ credit files. Under the rules change, Nash warns that doctors could see a significant decline in revenue. “The doctor says, well, I provided the service, pay me. But the federal government has now prevented the provider from doing anything that they need to do to collect their premium.”
Opponents of the change in rules say they would like to see the issue debated in Congress. In an interview with NPR last month, ACA International CEO Scott Purcell expressed confidence in legislators’ abilities to find a solution, as opposed to the unelected bureaucracy of the CFPB.
“Here we’re coming up with a solution that only takes money away from providers,” Purcell told the outlet. “If Congress was involved, there could be more robust solutions.” ~Scott Purcell
The CFPB first initiated the rulemaking process to end medical debt reporting in September. The process remains ongoing.
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