The Trump administration’s Consumer Financial Protection Bureau (CFPB) issued guidance yesterday prohibiting states from wiping medical debt from consumers’ credit ratings.
The guidance deems that federal law overrides any state law that limits the inclusion of medical debt on individuals’ credit reports. The move could exacerbate the crippling effects of skyrocketing medical costs and hand financial industry groups a potential assist in their ongoing lawsuits to block these state-level protections.
Despite the fact that more than 90 percent of Americans have health insurance, medical debt in the United States has risen to an estimated $220 billion, larger than the entire economies of many states and impacting around 100 million Americans. Many of these individuals live in the South or low-income communities, and fifteen million of them have these medical bills listed on their credit reports. Financial institutions use this debt to cut consumers out of the financial system by claiming they’re too unreliable to receive a loan or other financial assistance.
Currently fifteen states, including California, Colorado, Maine, and Delaware, have introduced legislation to limit medical debt reporting and protect consumers. However, the Trump administration is now actively trying to quash these laws, said Chi Chi Wu, an attorney at the National Consumer Law Center, an organization that fights for economic justice for low-income and other vulnerable communities.
The guidance is “trying to invalidate [state] protections that don’t cost anything to anyone,” said Wu. “It’s not just taking a hands-off approach and saying, ‘We won’t protect consumers,’ it’s saying, ‘We are going to actively harm you.’”
Under President Joe Biden’s administration, the Consumer Financial Protection Bureau, a watchdog agency founded in the wake of the 2008 financial crisis, instituted a rule that would have removed an estimated $49 billion in medical debt from…
Auteur: Luke Goldstein
