In a major move, the Biden administration plans to cut medical bills from Americans’ credit reports, aiming to end coercive debt collection tactics.
Vice President Kamala Harris and consumer finance watchdog Rohit Chopra announced the proposals earlier on Friday. The plans will provide financial relief to families recovering from medical crises, prevent debt collectors from pressuring individuals to pay bills they may not owe, and ensure accurate data for creditors.
Over 100 million Americans currently have unpaid medical debt. The Consumer Financial Protection Bureau reported that 20% of Americans carry medical debt. However, it is an unreliable indicator of their likelihood to pay traditional debts.
A study by the Brookings Institute found that 80% of medical debt is held by households with zero or negative net worth, with communities of color disproportionately affected.