Organizations Appeal to Congress Over CFPB’s Rule on Medical Debt

TL/DR –

Several organizations have written to Senator Rounds and Congressman Norman expressing their disapproval towards the Consumer Financial Protection Bureau’s (CFPB) rule on medical debt. They argue that the rule, which prevents consumer reporting agencies from including information about medical debt on credit reports and creditors from considering this information when making credit decisions, is harmful. They claim it will undermine the credit market, limit access to affordable care, particularly in rural communities, and create financial strain for medical providers due to the reduction in consumer payment incentives.

Strong Support Expressed to Disapprove CFPB’s Rule on Medical Debt

Various organizations have showcased strong support against the Consumer Financial Protection Bureau’s (CFPB) rule on medical debt, appealing to Senator Rounds and Congressman Norman to use the Congressional Review Act (CRA). They argue that the rule, while aimed at assisting individuals affected by medical debt, will instead result in harming them without addressing the underlying complexities of the healthcare system or eliminating the debt.

These organizations, representing healthcare and financial services sectors, predict unintended consequences of the rule, such as undermining credit markets and limiting access to affordable care. Specifically, the rule prohibits consumer reporting agencies from including information about medical debt on credit reports and creditors from considering this information during credit decisions. This could particularly affect rural communities. They argue this rule contradicts the Fair Credit Reporting Act’s statutory framework that Congress enacted.[1]

Set to potentially create a new financial strain for medical providers, the rule may decrease incentives for consumers to make payments, resulting in a projected first-year loss of approximately $24 billion for medical providers.[2] This could severely impact the ability of hospitals and healthcare providers to invest in equipment, provide necessary services and maintain rural facilities.[3]

The rule also threatens to undermine the risk-based pricing system that helps expand access to credit for all borrowers.[4] Without access to information about medical debt, banks and credit unions offering mortgages and automotive loans may end up lending to individuals who cannot afford repayments, ultimately leading to raised rates for all borrowers.

By disapproving the rule using the CRA, future CFPB regulatory decisions would be more aligned with the views of Congress and consider their broader economic and societal impacts. It would also prevent the CFPB from promulgating a future rule prohibiting information from being included in a credit report.

Organizations including ACA International, American Association of Healthcare Administrative Management, American Bankers Association, American Dental Association, American Financial Services Association, Consumer Data Industry Association, Electronic Transaction Association, Healthcare Business Management Association, Healthcare Financial Management Association, Innovative Lending Platform Association, Online Lenders Alliance, Receivables Management Association International, and the U.S. Chamber of Commerce have expressed their gratitude for the leadership’s focus on this critical issue.

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