In a significant move aimed at alleviating the pressure of medical debt on Americans, Vice President Kamala Harris has unveiled a new proposal to bar medical bills from being reported on credit scores. This directive, as announced by the White House, could potentially remove medical debt from the credit reports of over 15 million US citizens, potentially increasing their credit by an average of 20 points.

The game-changing rule proposed by the Consumer Financial Protection Bureau (CFPB) is set to completely eradicate the presence of medical debt on credit reports, a stark contrast from the staggering 46 million Americans affected by such debt in 2020. The objective is clear: to make it easier for individuals to access housing and other forms of credit, without the additional hurdle of medical expenses they have often already settled. Acknowledging healthcare as a right, not a privilege, Harris also urged states and municipalities to adopt measures to further decrease the burden of medical debt.

This comprehensive approach involves leveraging public funds to buy and forgive medical debt, which could be purchased at largely discounted prices. Various states and local governments, fueled by the economic stimulus of the American Rescue Plan, have already stepped up, providing relief of an estimated $7 billion in medical debt to almost 3 million Americans across the nation. Cities like Cook County, Illinois, and states such as Arizona and New Jersey are some of the forerunners in utilizing ARP funds to provide significant debt relief to their residents.

In conjunction with these efforts, the Vice President is calling on states to expand financial aid, shield patients from aggressive debt collectors and improving access to healthcare. Moreover, the proposal includes checks on coercive debt collection practices. Some states have already begun to implement safeguards, like limiting the collection of medical debt until insurance appeals are resolved and capping interest rates on such debts. Progress is evident—but not universal—and Harris advocates for more widespread adoption of these reforms to protect consumers effectively.

Underpinning this movement, the Biden-Harris administration has already made strides to reduce healthcare costs and minimize the impact of medical debt. Notable achievements include the lowering of insurance costs through the Affordable Care Act and expanded coverage, resulting in the lowest uninsured rates on record. These efforts include the removal of medical debt from credit reports by major credit reporting agencies, a strategy designed to counter the prevalence of medical bills on consumer credit reports. In addition, the administration has worked on curbing the cost of prescription drugs and capping out-of-pocket drug expenses for Medicare beneficiaries under the Inflation Reduction Act.

The proposed reforms and ongoing initiatives highlight the administration's recognition of the disproportionate impact of medical debt on vulnerable populations, including people of colour, veterans, and low-income families. By targeting medical debt at both the policy and credit-reporting levels, the administration sets a precedent in prioritizing the financial and physical health of its citizens. For detailed information on these plans and their impact, the White House released a comprehensive fact sheet detailing Vice President Harris's proposals and the administration's track record.