Republicans Take Aim at Families Struggling with Medical Debt
By Amanda Jackson
This week, Republicans in Congress introduced a resolution to undo a Consumer Financial Protection Bureau (CFPB) rule that prevents medical debt from capsizing people’s credit scores. More than 100 million people have medical debt and it shows up on the credit reports of 15 million people. The Republican attack on the rule burdens people with significant medical debt by making it harder to access credit or more expensive to get a loan.
The CFPB rule will remove medical debt from most credit reports and prohibit lenders from considering medical debt when they make loan decisions. This makes good sense. People run up medical debt unexpectedly and unpredictably when they get sick or injured. Credit reporting companies like Equifax, TransUnion, and Experian don’t make distinctions between different kinds of debt when they dole out credit scores that affect so much of our lives (whether we get loans, jobs, or housing). Instead, medical debt is among the many factors that these companies use to rate our so-called creditworthiness. And medical debt brings credit scores down, is often filled with inaccuracies or misreporting, and interferes with the ability to secure loans. So, it is a big barrier to access mainstream finance even though medical debt is not an accurate predictor of whether people pay their bills.
The people who rack up medical debt are sicker, have jobs with worse health insurance coverage, and have lower incomes and household wealth. Medical debt essentially reinforces and amplifies the racial inequalities in the economy and the financial system. Since the cost of care is already high, when people go into debt for medical emergencies, it deepens existing disparities in both health outcomes and financial stability. Black and Latine families have much more medical debt and significantly lower credit scores, which can shut them out of the system altogether — and threaten their livelihoods and economic stability. Black and Latine individuals in the South, in particular, carry more medical debt on their credit reports. People with disabilities are twice as likely to have past-due medical bills as others. And veterans and servicemembers have as much as $6 billion in medical debt.
The Republican effort to overturn the medical debt rule effectively punishes people for having medical needs and emergencies. The patchwork health insurance system, without comprehensive public healthcare coverage, means that the negative impact of medical debt on families’ falls hardest on those who need access to the financial system the most—while the credit reporting industry profits. Equifax, TransUnion, and Experian dominate the industry, and without the medical debt rule, they will continue to reinforce financial hardship by tying credit scores and allowing lenders to tie credit decisions to medical debt loads. People are left to dispute medical debt errors and inaccuracies—often to the point of exhaustion and defeat.
The Republican attack on the medical debt rule would unravel an important tool to mitigate racial and economic inequality and just calcify the runaway systematic financial exclusion propagated by the credit reporting companies. And it is part of the broader Trump-Musk attack on the mission and accomplishments of the CFPB that has included purging staff, slashing budgets, abandoning enforcement cases, and more. The Republican Congress is also trying to repeal the CFPB overdraft rule and the payment app oversight rule. The repeal of these rules would be giant giveaways to big banks and Big Tech. Congress should stand with the people, not the financial predators, Wall Street banks, Big Tech, and the credit bureau tri-opoly and should vote against efforts to repeal the medical debt, overdraft, and payment app rules.