The Biden administration announced a new proposal on Tuesday (June 11) that aims to alleviate the burden of medical debt for over 15 million Americans.
Proposed Rule Targets Medical Debt in Loan Decisions
This initiative is designed to improve their chances of qualifying for loans related to cars, homes, and small businesses.
The proposed rule, subject to a public comment period, will not be implemented right away.
This policy would prevent health care providers from sharing medical debt with loan providers and would also prohibit them from considering medical information when making loan decisions.
According to The New York Times, medical debt is a significant burden for many Americans, with approximately 20 million individuals owing more than $250 to health care providers.
Individuals from Black and Latino communities, as well as those with lower incomes or lacking insurance, are more inclined to disclose having unpaid bills.
New Rule Proposal Could Boost Credit Scores by 20 Points
The administration projects that if put into effect, the rule would potentially increase the credit scores of those affected by an average of 20 points.
This, in turn, could potentially result in the approval of approximately 22,000 additional mortgages annually due to the improved credit reports, NBC News reported .
According to undisclosed administration officials, it is expected that the policy will not be implemented until early next year. The deadline for public comments is August 12.
In another statement, Harris urged states, local governments, and health care providers to utilize federal funds, including those from the American Rescue Plan, to alleviate medical debt, prevent its growth, and safeguard patients from aggressive debt collectors.
She emphasized the importance of expanding access to charity care as part of these efforts.
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