Sep 21, 2023

Anthony Lux serves as CCLP's director of communications. His areas of expertise include institutional communications strategies, constituency growth and network activation for cause-driven organizations. Staff page ›

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PRESS RELEASE: Consumer Financial Protection Bureau announces groundbreaking plan to protect Americans from the devastating effects of medical debt

by | Sep 21, 2023

CFPB Proposes Prohibiting Inclusion of Medical Debt on Consumer’s Credit Reports

 

The following announcement was jointly released by our partners at National Consumer Law Center, Community Catalyst, the National Association of Consumer Advocates, RIP Medical Debt, and U.S. PIRG.

WASHINGTON – Consumer advocates at the National Consumer Law Center (NCLC), Community Catalyst, Americans for Financial Reform, National Association of Consumer Advocates, RIP Medical Debt, U.S. PIRG, and Colorado Center on Law and Policy cheer today’s announcement that the Consumer Financial Protection Bureau (CFPB) is proposing a prohibition on the reporting of all medical debts on credit reports.

“Negative credit reporting is one of the biggest pain points for patients with medical debt,” said Chi Chi Wu, senior attorney at the National Consumer Law Center. “When we hear from consumers about medical debt, they often talk about the devastating consequences that bad credit from medical debts has had on their financial lives.  A bad credit score doesn’t just affect your ability to get credit, but also your employment prospects, insurance rates, and ability to get rental housing. Yet, as the CFPB has found, medical debt has limited predictive value for creditworthiness compared to other types of debts.”

NCLC filed a petition to the CFPB in September 2022 requesting that the CFPB start a rulemaking process to ban the reporting of medical debts on credit reports.  Community Catalyst also filed a petition to ban the reporting of medical debts in April 2023, for which U.S. PIRG filed a comment in support.

“We applaud the Biden-Harris administration for taking important steps to address the medical debt crisis in America,” said Emily Stewart, executive director, Community Catalyst. “This is an important milestone in our collective efforts and will provide immediate relief to people that have unfairly had their credit impacted simply because they got sick. Nobody, no matter where we live or how much money we have, should be forced to make the impossible choice between getting essential care and going into debt.”

Voluntary credit reporting changes by Equifax, Experian, and TransUnion instituted a one-year delay before including alleged medical debts on credit reports. The three credit bureaus also eliminated the reporting of unpaid medical debts less than $500 and removed paid medical debts. However, CFPB research highlighted the limitations of these changes, including that about half of consumers with medical debts on their credit reports would continue to have those debts reported after the voluntary changes and that consumers whose debt would be removed were more likely to be white and higher income.

“The voluntary changes by the credit bureaus were simply not enough,” said Julia Char Gilbert, Connelly Policy Advocate at Colorado Center on Law and Policy. “Patients with medical debts over $500 are often most vulnerable to the catastrophic harms of damaged credit reports, a key reason that Colorado moved to ban credit reporting of all medical debt. The CFPB’s decision to extend these protections to all Americans is a huge win for patients and their families.”

“Once again, the CFPB delivers for millions of consumers,” said Elyse Hicks, consumer policy counsel at Americans for Financial Reform “This is why it’s so important to defend the CFPB and ensure its continued survival in the face of attacks by corporate America.”

“With this thoughtful action, the Bureau will relieve patients of the burden that unpredictable and often confusing medical bills could negatively impact other aspects of their financial lives,” said Christine Hines, legislative director at the National Association of Consumer Advocates. “Removing credit reporting of shock medical debts will no doubt improve the financial well-being of millions of people.”

“As the leader of an organization committed to erasing burdensome medical debts, I’m thrilled to see this action taken by the CFPB,” said RIP Medical Debt CEO and president Allison Sesso. “This proposal ensures no one’s credit worthiness hinges on their necessary healthcare. And while this is a great stride, we need the federal government to also identify, absent credit reporting data, how we can continue to track the scale of this enormous crisis. Medical debts are often obscured from reporting when patients pay with credit cards or borrow money from friends/family.”

“As health care prices rise and patients are left shouldering more of the costs in out-of-pocket expenses, this announcement is welcome news,” said Patricia Kelmar, senior director of health care campaigns for U.S. PIRG.  “We’ve known for years that medical debt doesn’t predict credit defaults, nor does it accurately predict a person’s desire and willingness to pay off loans. In fact, CFPB’s own research showed that medical billing data on a credit report is ‘less predictive of future repayment than reporting on traditional credit obligations.’”

“This will help millions of consumers whose credit reports contain medical debts, including Black consumers who are disproportionately burdened by medical bills,” said Berneta Haynes, senior attorney at the National Consumer Law Center. “The CFPB’s research found that 13.5 percent of consumers with credit reports – about 27 million Americans – have medical debts shown on their credit reports.”  Ms. Haynes is the author of a March 2022 NCLC report The Racial Health and Wealth Gap: Impact of Medical Debt on Black Families.

 

Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.

Community Catalyst is a national organization dedicated to building the power of people to create a health system rooted in race equity and health justice, and a society where health is a right for all. We’re an experienced, trusted partner to organizations across the country, a change agent to policymakers at the local, state, and national level, and both an adversary and a collaborator to health systems in our efforts to advance health justice. We partner with local, state and national organizations and leaders to leverage and build power so that people are at the center of important decisions about health and health care, whether they are made by health care executives, in state houses, or on Capitol Hill. Together with partners, we’re building a powerful, united movement with a shared vision of and strategy for a health system accountable to all people.

Colorado Center on Law and Policy is a non-partisan, nonprofit advocacy organization dedicated to the vision that every Coloradan should have what they need to succeed. For 25 years CCLP has stood with diverse communities across Colorado in the fight against poverty through research, legislation and legal advocacy.

The National Association of Consumer Advocates (NACA) is a nationwide non-profit membership organization of private, public sector, legal services and non-profit attorneys, law professors, and law students whose primary interest is the protection and representation of consumers. Since its inception, NACA has focused on issues concerning unfair, deceptive, abusive and fraudulent practices by businesses that provide financial and credit-related services.

RIP Medical Debt is a national 501(c)(3) nonprofit that has acquired — and abolished — more than $10 billion of burdensome medical debt, helping 7 million families and addressing a major social determinant of health. RIP partners with individuals, faith-based organizations, foundations, corporations and government to empower donors by converting every dollar contributed into $100 of medical debt relief on average.

U.S. PIRG is an advocate for the public interest with PIRG affiliates in two dozen states. We promote policies that protect consumers and support the delivery of the high value healthcare we deserve.

Recent articles

CCLP’s 2024 legislative wrap-up, part 2

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs. Part 2/2.

CCLP’s 2024 legislative wrap-up, part 1

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs.

CCLP testifies in support of Clean Slate updates

Bethany Pray, CCLP’s Chief Legal and Policy Officer, provided testimony in support of House Bill 24-1133, Criminal Record Sealing & Expungement Changes. CCLP is in support of HB24-1133, as it is one of our priority bills.

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.