- The Biden administration laid out a four-point plan to reduce America's medical debt on Monday, including having the HHS dig into how providers' billing practices impact care access and affordability.
- Under the plan announced by Vice President Kamala Harris, the HHS will request data from 2,000 providers on their bill collection practices, lawsuits against patients, financial assistance offerings, debt buying practices and more. The HHS will use this information in grant determinations, and to shape data and policy recommendations to the public. The department will also share potential violations with enforcement agencies.
- The White House is also guiding federal agencies to stop using medical debt as an underwriting factor in credit programs where possible.
Dogged by low approval ratings and widespread concerns about inflation heading into the midterm elections, the Biden administration is looking to ease Americans' economic burden through the new measures targeting medical debt.
It's a perennial issue in the U.S., but one that's been exacerbated by COVID-19 and is currently the largest source of debt in collections. Nearly one in 10 adults have significant medical debt, which is more concentrated in low-income populations and communities of color. Overall, Americans owe at least $195 billion in medical debt, according to recent research from the Kaiser Family Foundation and the Peterson Center on Healthcare.
Along with stressing Americans' mental and financial health, pricey unpaid medical bills are also associated with reduced healthcare use, which could worsen outcomes (and lead to even higher costs) down the line.
The new White House plan builds on President Joe Biden's recent executive order to increase access to affordable healthcare coverage, and relies heavily on the HHS evaluating providers' billing practices to try to identify and eliminate predatory and aggressive billing behaviors.
"The federal government pays roughly $1.5 trillion a year into the health care system to provide patients with quality care and services," the White House said in a release. "Providers receiving that funding should make it easy for eligible patients to receive the financial assistance they are entitled to, and should not directly or indirectly subject patients to illegal and harassing debt collection practices."
Hospitals have faced rising criticism over their billing and debt collection practices, leading in some cases to high-profile lawsuits. In response to the plan, powerful hospital lobby the American Hospital Association said hospitals rely on collection actions as a last resort, and it looks forward to learning more about the new initiative.
Separately, the Consumer Financial Protection Bureau will investigate credit reporting companies and debt collectors to target coercive credit reporting, and determine whether unpaid medical billing data should ever be included in credit reports.
The new steps follow a decision made by the three largest credit reporting agencies last month to remove almost 70% of medical debt from consumer credit reports. Starting in July, Equifax, Experian and TransUnion will no longer include medical debt that went to collections on consumer credit reports, once it's been paid off, along with unpaid debts less than a year old and debts paid or unpaid under $500.
The Biden administration also announced Monday that the Department of Veterans Affairs will streamline the medical debt relief process for low-income veterans, including setting an income threshold to qualify for relief.
Additionally, the CFPB will increase outreach and education to consumers to help them navigate the medical billing landscape, including on accessing financial assistance.