The White House Wants to Help People Burdened With Unpaid Medical Bills by Holding Shady Debt Collectors Accountable

“No one in our nation should have to go bankrupt just to get the health care they need,” Vice President Kamala Harris said on Monday.

Need to Know

• Vice President Kamala Harris announced an action plan to ease the burden of medical debt for families and individuals amid rising inflation rates.
• Under this plan, CFPB will hold medical providers and debt collectors accountable for harmful practices
• The plan will also reduce the role that medical debt plays in determining whether Americans can access credit— increasing opportunities for people with medical debt to become a homeowner or get a small business loan

D.C.— One in three adults in the United States are saddled with unpaid hospital and doctor bills, making medical debt the largest source of debt collections— more than credit cards, utilities, and auto loans combined. Black and Hispanic families are often disproportionately affected, while women are also more likely to pay higher healthcare costs.

“I don’t have $2,000 just to throw at somebody,” one former patient at Munson Medical Center, Northern Michigan’s largest hospital system, told Traverse City Record-Eagle last year. The media outlet found Munson had sued hundreds of patients to collect unpaid healthcare bills, winning more than $2.3 million between 2018 and 2021. “These people are expecting you to pay the whole medical bill, otherwise you’re tied to them forever.” 

In an attempt to help more Americans deal with the rising cost of living, the Biden-Harris administration has announced new actions to lessen the burden of medical debt and protect consumers from unfair and aggressive debt-collection practices.

Medical debt has become the most common cause of bankruptcy. Being unable to pay bills in time can also affect consumers’ credit scores and their ability to buy homes or start small businesses. In 2019, CNBC reported two-thirds of people who file for bankruptcy cite costs associated with their health care as a major factor to their financial issues. 

Built on President Joe Biden’s recent executive order expanding affordable healthcare coverage, the plan aims to reduce the role that medical debt plays in determining whether Americans can access credit and thus, open new opportunities for people with medical debt to become a homeowner or get a business loan. 

“No one in our nation should have to go bankrupt just to get the health care they need,” Vice President Kamala Harris said on Monday. “Having medical debt because you were sick or injured should not lower your credit score and make it more difficult to secure the help you need to get out of debt. It’s not logical.”

Under this plan, the Consumer Financial Protection Bureau (CFPB) will investigate credit reporting companies and debt collectors that violate patients’ and families’ rights by using abusive means to collect debts. Harris said the administration is also taking action against the bad actors who violate consumers’ rights to force people to pay medical debt.

With lawsuits against patients over medical bills on the rise, hospitals sometimes sell outstanding bills to third-party debt collectors, according to the White House fact sheet. During her speech, Harris talked about how some debt collectors harass consumers with multiple calls a week. Some even pose as law enforcement officials or threaten patients with jail time.

“Remember what we are talking about—folks who are in the process of attempting to recover from an illness,” Harris said. “That sort of harassment and intimidation is unethical and often it is illegal. And that is why the CFPB has made it a priority to hold debt collectors accountable.”

The federal government pays roughly $1.5 trillion a year into the healthcare system to provide patients with quality care and services. Providers receiving that funding are expected to 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 or harmful debt collection practices. 

New economic hardships were added during the COVID-19 pandemic. A recent report by the Government Accountability Office noted a chronic condition called long COVID has potentially affected up to 23 million U.S. residents, pushing at least 1 million out of work due to fatigue, brain fog, and other debilitating symptoms linked to the condition.  

In other words, the number of American who may be seeking care due to the long-term effects of COVID may increase. And because 64% of people live paycheck to paycheck, it’s all but certain more people will incur debt associated with their care. 

Harris announced the CFPB is launching a new public education campaign to help consumers understand and know their rights when it comes to the complex and medical billing landscape, including more materials specifically designed to help patients access the financial assistance they are entitled to. 

Additionally, the actions under the plan also include helping over half a million of low-income American veterans get their medical debt forgiven. Veterans Affairs (VA) has canceled or refunded billions of dollars in copayments to over 1.5 million veterans, since the beginning of the pandemic. The American Rescue Plan also eliminated all out-of-pocket medical costs for veterans enrolled in VA health care.

But the process, as of now, for veterans in financial hardship who need medical debt relief from the VA is often confusing and time-consuming. The application is only in paper form at the current time with complicated eligibility requirements which can deter many veterans from applying for the essential relief.

To address these problems and ensure that veterans get the relief they deserve, Harris announced the VA will streamline the request process, including offering an online option to apply, and set a simple income threshold to qualify for relief.