The American public faces a significant affordability crisis, compounded by rising electricity and grocery costs, as well as potential healthcare premium increases. The expiration of ACA tax credits could lead to a doubling of average premiums, potentially plunging millions into medical debt, with a majority of medical debt reports containing errors. This surge in debt will disproportionately impact families, pushing them towards financial hardship. The situation is further exacerbated by potential healthcare cuts and policies that could benefit large corporations, and could be detrimental to working families.
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The state of Michigan is eliminating over $144 million in medical debt for more than 200,000 residents by partnering with Undue Medical Debt. Undue uses similar tactics as debt buyers, purchasing debt at a discounted rate and forgiving it entirely. Letters from Undue will notify affected residents by the end of the month. This initiative was funded through the state’s fiscal year 2024 budget, and the governor is open to expanding it further.
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In a recent ruling, a federal judge in Texas overturned a Biden administration rule aimed at removing medical debt from credit reports, impacting approximately 15 million Americans. The rule, which sought to alter how credit scores are calculated by removing $50 million in medical debt, was deemed unlawful by Judge Sean Jordan, who argued the Consumer Financial Protection Bureau (CFPB) exceeded its authority under the Fair Credit Reporting Act. The CFPB had projected that the changes would improve credit scores and increase mortgage approvals. The judge’s decision prevents these changes from being implemented, but he did note the bureau can “encourage” creditors to use other categories of information.
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A staggering $74 billion in medical debt was accrued by 31 million U.S. adults in the past year, highlighting the pervasive issue of unaffordable healthcare. This debt affects even those with health insurance, with nearly one-third of survey respondents expressing significant concern about incurring medical debt from a major health event. To manage costs, families often compromise on necessities like food and rent, underscoring the critical need for healthcare reform. Significant disparities exist across age groups, with younger adults disproportionately affected, while older adults benefit from more comprehensive Medicare coverage.
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This landmark Biden administration rule eliminates medical debt from consumer credit reports, significantly impacting credit scores. The new regulation prevents lenders from using unpaid medical bills to assess creditworthiness. This change aims to alleviate the financial burden of medical debt on millions of Americans and promote fairer lending practices. The impact is expected to improve access to credit for those previously hindered by medical debt.
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A new Biden administration rule will eliminate $49 billion in medical debt from the credit reports of over 15 million Americans, effectively preventing its use in loan applications. This action, praised by Vice President Harris as “lifechanging,” is projected to boost credit scores by an average of 20 points and facilitate thousands of additional mortgage approvals annually. The rule addresses the issue of medical debt’s inaccurate prediction of repayment ability, building upon prior efforts by credit reporting agencies to remove smaller medical debts. The initiative complements over $1 billion in state and local medical debt relief already enacted using pandemic aid funds.
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The Biden administration’s final rule eliminates unpaid medical debt from credit reports, impacting over 15 million Americans and removing $49 billion in debt. This change, expected to boost credit scores by an average of 20 points, will prevent lenders from using medical debt in loan decisions. The rule follows the credit bureaus’ prior action of removing medical collections under $500 and is projected to increase mortgage approvals significantly. This action aims to address the inequity of individuals facing financial hardship due to medical expenses.
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The Biden administration’s recent move to ban medical debt from credit reports is a significant step towards addressing a long-standing problem in the American healthcare system. This action directly impacts millions of Americans burdened by medical debt, a situation often arising through no fault of their own.
This initiative aims to alleviate the financial strain on individuals struggling to manage healthcare costs. High medical expenses frequently result in unpaid bills, which then negatively affect credit scores, creating a vicious cycle of financial hardship. By removing this type of debt from credit reports, the administration hopes to give individuals a fresh start and a fairer chance to rebuild their financial lives.… Continue reading
John Q. Hosedrinker 
Matt Underwood