Queens, NY – Tuesday, June 11, 2024 – Today the Biden administration and the Consumer Financial Protection Bureau (CFPB) announced, building on a proposal from last September, a new rule that would, primarily, ban all medical debt credit reporting, which could remove $49 billion of medical debt, increasing the credit scores of potentially 15 million people in the U.S.  

This latest milestone in protecting patients from the most common collection action follows positive momentum in March of 2022 when the three major credit reporting agencies (Equifax, Experian, and TransUnion) extended the period before a medical debt could impact one’s credit report from 180 days to one year, removed all paid medical debts from credit reports and stopped reporting on medical debts below $500. This was prompted by research from the CFPB estimating that $88 billion of medical debt was sitting on credit reports. 

Fast Facts: 

• Per the CFPB, in 2023 medical debt represented the majority (57%) of all collections on credit reports.  
• A survey sponsored by Undue Medical Debt, The American Cancer Society Cancer Action Network and The Leukemia & Lymphoma Society (in partnership with PerryUndem) found that 91% of respondents agree that “elected officials should pass policies that protect people with serious illnesses like cancer from medical debt and harassment from collection agencies.” 
• That survey also found 75%-95% bipartisan support for policies lessening the impact of medical debt on patients. 
• Polling from Tulchin Research has also found that 81% of respondents agree that “medical debt is different from other types of debt that people choose to take on because no one chooses to have an unexpected illness or injury.” 

While these changes in 2022 made medical debt less of a credit score burden for patients, as of April, 15 million Americans still had medical debt on their credit reports, many of whom live in low-income communities in the South, in census tracts with higher percentages of Black and Hispanic residents.  

“Medical debt is an unfair burden on millions of people and I am thrilled to see the CFPB taking action” shares Undue Medical Debt CEO and president Allison Sesso. “Access to necessary healthcare should have zero impact on creditworthiness and while many providers like hospitals have stopped reporting to the credit bureaus, this is still a huge achievement for the millions struggling with a depressed credit score simply because they got sick or were in an accident. The administration’s actions continue to elevate the issue of medical debt as a national crisis requiring a coordinated, holistic response.” 

Allison adds, “While there is still more work to be done, as medical debts will persist on credit reports in less obvious ways like when people put unpayable medical care on credit cards, this rule is an important step and should remove a common collection action which undermines already burdened communities like those with low-incomes and people of color, especially those living in the South. That said, the work of organizations like ourselves and others continues; we have to be mindful of other harms related to medical debt, like the associated mental health burden which increases feelings of anxiety and/or depression or individuals who delay or skip necessary healthcare because of persisting fears around cost (nearly half of adults – 43% –shared that they or a family member postponed necessary care because of cost). Feelings of shame too often undermine patient trust and willingness to get care and this rule is an important building block in fixing that.” 

An Undue recipient of debt relief, Kay, shares: “Firstly, I felt a sense of relief. I’m happy to have one less burden to worry about and to put an end to the collection calls and this debt showing up on my credit. I had gone in for a routine exam. Insurance only covered a part of it and because I hadn’t fully paid into my deductible, the bills started coming in. I think that debt can be a form of bondage- it is not something anyone should have to struggle with. All of this was created by humans and can be changed by humans.” 

According to the CFPB, medical debt has limited predictive value for creditworthiness compared to other types of debt. Medical debt can have devastating consequences on a patient’s financial viability. A bad credit score impacts everything from your ability to get a loan or mortgage to employment prospects and insurance rates.