US Financial Regulator Battles Rising Medical Debt
TL/DR –
The Consumer Financial Protection Bureau (CFPB), initially established to protect people from banks, lenders and investment houses, is increasingly working to protect patients from health care debt, targeting institutions including hospitals and patient financing companies. Recently, the CFPB is developing rules to bar medical debt from consumer credit reports to alleviate the financial burden it has caused on millions of Americans. However, collection industry officials argue that this move is misguided and could lead to more hospitals and doctors demanding patients to pay upfront for care.
Rohit Chopra on Medical Debt and the Consumer Financial Protection Bureau
Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB), shared his insights with KFF Health News about people’s struggles with medical bills.
CFPB’s Role in Addressing Healthcare Debt
Since its creation in 2010, the CFPB has diligently worked to protect consumers from financial exploitation, with healthcare debt increasingly becoming a focus. The agency has issued penalties to medical debt collectors, warned healthcare providers, and shed light on the financial insecurity caused by the healthcare system.
Proposal to Bar Medical Debt from Consumer Credit Reports
In a significant move, the agency is developing rules to exclude medical debt from consumer credit reports, potentially making it easier for Americans to secure housing, vehicle financing, and employment. These rules are expected to be unveiled later this year.
Industry Opposition and Legal Challenges
The CFPB’s efforts have provoked opposition from the collections industry, with ACA International questioning the overreach on medical billing. The U.S. Supreme Court is currently reviewing a legal challenge against the agency’s funding.
Medical Debt Crisis
Advocates argue that the CFPB’s initiative is a response to the escalating medical debt crisis that affects approximately 100 million Americans. Chi Chi Wu, a senior attorney at the National Consumer Law Center, comments on the systemic dysfunction leading to financial repercussions for patients.
Medical Debt and Credit Reports
According to the CFPB, unpaid medical bills are the most common form of debt on consumer credit reports, yet they poorly predict a person’s ability to pay other bills. The agency has also uncovered multiple errors in the medical debts listed on credit reports.
CFPB’s Aggressive Stance on Medical Debt
Chopra’s rigorous approach echoes his past efforts against the student loan industry. He now observes similar troubling trends in the healthcare system, such as pushing patients into loans and credit cards.
CFPB’s Commitment to Medical Debt Issues
In the past two years, the CFPB has diligently worked on medical debt issues, including warning nursing homes against pressuring residents’ friends and family into assuming debts. The agency has also highlighted problematic practices around financial assistance for low-income patients.
Collector’s Response to CFPB Actions
Critics argue that CFPB’s crackdown may lead to healthcare providers demanding upfront payment. There are indications that this is already occurring, with hospitals encouraging patients to enroll in loans or credit cards to cover medical expenses.
Chopra’s Take on Healthcare Costs
Chopra recognizes the need for broader efforts to manage healthcare costs. However, he maintains that the CFPB’s role is to protect patients who can’t afford their medical bills.
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