While an overwhelming majority of Missouri votes voted against her, Vice President Kamala Harris has ensured that state residents with medical debt will not have it impact their credit reports.
Harris announced on Tuesday that medical debt will no longer be included in consumer credit reports, which could help millions of African Americans improve their aspects of wealth building.
Acquiring a home loan, paying a lower interest rate on houses and vehicles and acquiring business capital can all be tied to credit ratings. Many Black Americans have solid credit ratings, except for medical debt for unforeseen health crisis.
Harris announced that states and municipalities have leveraged American Rescue Plan (ARP) funds to help elimination over $1 billion in medical debt for more than 700,000 Americans.
According to The White House, Overall, roughly $15 billion in medical debt for up to nearly 6 million Americans could be erased.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency. (The Biden administration) also reduced the burden of medical debt by increasing pathways to forgiveness and cracking down on predatory debt collection tactics,” said Harris is a release.
“Today, we are building on this meaningful work by announcing an unprecedented final rule that will make it so medical debt is no longer included in your credit score. This will be lifechanging for millions of families, making it easier for them to be approved for a car loan, a home loan, or a small-business loan.
“As someone who has spent my entire career fighting to protect consumers and lower medical bills, I know that our historic rule will help more Americans save money, build wealth, and thrive.”
A survey conducted on behalf of the Missouri Foundation for Health released in June 2024 showed that half of Missouri adults report having current medical debt or have had medical debt in the past five years (50%) including 39% who currently have medical debt.
The results align with data from a March 2022 national study of American adults conducted by KFF where 41% of US adults reported having current medical debt and another 16% reported having medical debt in the previous five years.
The statewide survey concluded that medical debt impacts many areas of Missourians’ finances.
-Three in ten adults with recent medical debt say it has negatively impacted their credit score (31%).
-22% say it has impacted them negatively when applying for a car loan. And 19% of those with medical debt say it has impacted them negatively when applying for an apartment or mortgage.
In the survey’s executive summary, MFH states “The root cause of medical debt, health care affordability, is a struggle for many Missouri residents. Overall, more than four in ten Missouri residents say they would be not able to pay off an unexpected medical bill of $500 right away (42%). Additionally, having health insurance does not alleviate the burden of these high costs. In fact, a large majority of Missourians with recent medical debt had health insurance when they received the medical care that resulted in their medical debt (78%).”
According to MFH, to reach a large enough sample sizes for analysis of demographic groups of interest, the survey was designed to reach larger numbers of non-Hispanic Black, Hispanic, and Rural Missouri adults.
The final sample size included 2,047 Missouri adults with 302 non-Hispanic Black adults, 132 Hispanic adults, and 658 rural adults. The study also reached 1,116 adults with recent medical debt.
“Recent medical debt” was defined as anyone who currently has or in the past five years has had any of the following:
• Any medical or dental bills that are past due or that they have been unable to pay
• Any medical or dental bills they are paying off over time directly to a provider
• Any debt they owe to a bank, collection agency, or other lender that includes debt or loans used to pay medical or dental bills
• Any medical or dental bills they have put on a credit card, and they are paying off over time • Any debt they owe to a family member or friend for money borrowed to pay medical or dental bills
Medical debt is the largest source of debt in collections and impacts 100 million Americans. It comprises a larger proportion of debt than credit cards, utilities, and auto loans.
Unlike other forms of debt, medical debt is often the result of unavoidable medical complications and medical bills often contain significant errors, such as inflated or duplicative charges and fees for services never received or already paid.
The CFPB is finalizing a rule that will remove medical debt from the credit reports of more than 15 million Americans, raising their credit scores by an estimated average of 20 points and leading to the approval of approximately 22,000 additional mortgages every year.
There will be zero Americans with medical debt listed on their credit reports, down from 46 million in 2020. CFPB’s research indicates that medical bills are poor predictors of an individual’s ability to repay a loan and that medical bills are often confusing and erroneous.
In March 2022, the CFPB released a report estimating that medical bills made up $88 billion of reported debts on credit reports. After the March 2022 report, the three largest credit reporting agencies announced that they would no longer include paid medical debts, unpaid medical debts less than a year old, and medical debt under $500 from credit reporting.
Despite these voluntary changes, 15 million Americans still have $49 billion in outstanding medical bills in collections appearing in the credit reporting system. Today’s action will remove these outstanding $49 billion in unpaid medical bills from the credit reports of the remaining 15 million impacted Americans.
