Sen. Raphael Warnock is amplifying his calls for a federal watchdog agency to ban medical debt from people’s credit reports, as the clock ticks down on a new presidential administration.
Georgia is one of the top five states where residents are burdened with medical debt, according to the health research organization KFF. Overall people in the U.S. owe more than $220 billion in medical debt, and it’s a leading cause of personal bankruptcy in the nation.
The Biden administration last year announced its intention to eliminate medical debt from most people’s credit reports through the U.S. Consumer Financial Protection Bureau. The rule wouldn’t eliminate the debts, but it would generally prevent banks and other institutions from making lending and hiring decisions based on an unpaid medical debt.
In June the CFPB laid the groundwork, proposing a rule. But the CFPB hasn’t finalized it yet. When Donald Trump takes office on Jan. 20, he may stop any rules that the CFPB hasn’t yet finalized, according to analyses by lobbyists and lawyers who are trying to predict what’s to come.
“The proposed rule is far too important to remain unsettled any longer,” Warnock and fellow Democratic senator Sherrod Brown wrote in a letter to the director of the CFPB, urging him to “swiftly finalize” the rule. Warnock added in comments at a Senate subcommittee afterwards that “medical debt is often unanticipated, it’s unplanned, and it can be high even if someone’s insured.”
Warnock chairs the Banking Subcommittee on Financial Institutions and Consumer Protection, which has jurisdiction over the CFPB.
CFPB Director Rohit Chopra said when he introduced the rule that medical bills are often incorrect to begin with. “The CFPB is seeking to end the senseless practice of weaponizing the credit reporting system to coerce patients into paying medical bills that they do not owe,” he said then. “Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans.”
In his testimony last week, Chopra brought up the example of a patient in a rural area having to be airlifted somewhere for care.
“In that air ambulance, they don’t get to shop around,” Chopra said. “They get the one that’s available. It’s not something that you search online and choose.”
All Republican members of the House Financial Services Committee have written opposing the rule, and they challenged that assertion by Chopra.
They said the CFPB used incomplete data to say that medical debt doesn’t predict whether you’ll be able to pay off a new loan. And banks have to have good information in making lending decisions, or all borrowers will pay the price in higher interest rates.
Moreover, the Republicans said in a letter to Chopra in August, if medical debt isn’t listed on people’s credit reports, consumers may then be encouraged to take on more medical debt because they know the consequences of not paying aren’t as “salient.”
The libertarian-leaning Georgia Public Policy Foundation in 2021 pointed out a survey that showed that more than 90% of people who appealed their medical bills got the health provider to drop the bill or reduce it. These are successful negotiations, the organization noted.
Warnock’s continuing to push for the rule.
“Senator Warnock has been pushing for action on this for almost the entirety of the Biden Administration, and time is running out to make it happen,” a Warnock spokesman said Monday. “Too many Georgians who are struggling are counting on this.”
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