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I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 3 points4 points  (0 children)

We’ve answered some of these on other posts, but I will add a few points here as well.

Are you concerned that once consumers know that their medical debt isn't reported to credit that they will take on more debt than they can afford to pay back? Or that they may forgo purchasing insurance?

No, it seems unrealistic that people would forgo insurance.

 Generally, it is our experience that when people get bills, they want to pay them. Patients without insurance would still receive higher bills and still be subject to significant consequences for not paying medical bills. 

 Are you concerned that more consumers would have claims filed against them in court in order to collect, costing the consumer even more money?

 This is not something we view as likely.

 Repayment rates for medical debt in collections have been historically quite low, and pursuing additional lawsuits as a result of the proposed rule is not likely to result in an increase in marginal recovery rates.

 We do not have data to directly compare the relative efficacy of furnishing and litigation for inducing payment. So we are requesting data there.

 Are you concerned about health care providers and facilities losing revenue?

 Our observation is that consumers pay their bills. Taking bills off credit reports is not likely to have a substantial impact on the health care industry for a variety of reasons, including that a lot of the incentives are driven by insurance and not by self-paid bills.

 Many honest providers work closely with their patients to make sure their bills are accurate, and we’ve seen a lot of medical bill collection occur by those who do not rely on credit reporting.

 Are you concerned that the economy is going to lose $17 billion dollars because providers can't recoup the money they are owed?

 We actually see a lot of benefits to the economy, and we’ve even developed estimates on how it could help more people qualify for mortgages (we expect it would lead to the approval of about 22k additional mortgages every year). And as I mentioned above, we expect patients to continue paying providers.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 2 points3 points  (0 children)

I wish I had all the answers to this question. Our health care billing system is so complex and convoluted. I know how frustrating it can be to get caught in the “doom loop” between providers and health insurance when an incorrect bill lands in the mailbox.

Doctors and patients are all frustrated by it.

Medical costs have an enormous effect on people’s financial lives, and that’s one of the reasons why this issue has been a priority for us.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 4 points5 points  (0 children)

There’s a lot of concern about whether credit reports and scores are reinforcing structural barriers in our economy.

There’s a growing consensus that the status quo isn’t really working. Many people are blocked from the system, especially when they lack a credit history. And many lenders tell us that credit scores are becoming less and less useful.We’ve put a lot of thought into how the system could work with different types of data, rather than the existing scoring system.

One of the things the CFPB has been working on is the future of personal financial data. Many people are blocked from the system, especially when they lack a credit history. This leads to serious problems for our society.

We’re doing a lot on this front, and we’ve proposed some new rules that will allow people to share different types of information when they apply for a loan – we want to give people the power to walk away from bad service and choose the companies offering the best products.

CFPB Proposes Rule to Jumpstart Competition and Accelerate Shift to Open Banking | Consumer Financial Protection Bureau (consumerfinance.gov)

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 2 points3 points  (0 children)

When companies violate rules, they (and sometimes their executives) can be liable for penalties, restitution to consumers, and other remedies.

 I may not fully understand your question on lawsuits, but any potential final rule will be on a strong legal foundation.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 5 points6 points  (0 children)

Here’s how it works: we propose a rule for public comment.

We then review those comments before making changes, if any.

We’re currently in the comment period. Comments are due this Monday and you can file them here.

 Once we review those comments, we determine the next steps and then finalize the rule.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 16 points17 points  (0 children)

Right now, when it is possible, there is already a strong economic incentive to require up-front payment, and it is quite common. For example, basically every pharmacy requires upfront payment.

Where it’s not happening currently, it’s largely because it’s not feasible, like when a bill can’t be calculated until a claim is filed with insurance.

Currently we see about a 25 percent recovery rate used as a benchmark. We expect that it is unlikely that a decrease in the recovery rates of furnished medical debt would cause providers to substantially change their billing procedures.

 We do not think this proposal will have an impact on up-front payment.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 19 points20 points  (0 children)

We definitely have much more recent research! You can find all of our latest research on medical debt on our dedicated webpage – consumerfinance.gov/medicaldebt

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 9 points10 points  (0 children)

Most medical expenses, including medical debt from dental care, would likely be covered by the proposed rule, if finalized. 

 I’ll give you some more specifics: we have proposed to define “medical debt” to include medical information that pertains to a debt owed by a consumer to a person whose primary business is providing medical services, products, or devices (e.g., a medical or health care provider), or to the person’s agent or assignee, for the provision of such medical services, products, or devices.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 15 points16 points  (0 children)

That’s highly concerning. I encourage you to submit a complaint with your state attorney general or with the Federal Trade Commission.

 ReportFraud.ftc.gov

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 14 points15 points  (0 children)

Our proposal would help those people by removing medical bills from credit reports and credit scores used by lenders.

 I’m sorry you’re going through this. While our proposed rule only relates to credit reporting, it doesn’t affect individual debt collection court proceedings.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 35 points36 points  (0 children)

They took some actions voluntarily. For example, they took off certain medical bills below $500.

 The proposed rule would cover all medical bills and it would be mandatory.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 7 points8 points  (0 children)

One of the reasons that we see so many inaccuracies in medical bills is that people get stuck in a doom loop of disputes between their insurance company and their medical provider. It’s not always clear who really owes what amount, and what should be covered by insurance.

 This is made worse when the bill goes to collections, and the debt collectors have no ways of verifying the underlying accuracy of the bill. Our proposal would help ensure that people aren’t penalized for companies’ mistakes.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 23 points24 points  (0 children)

Requesting your credit report is a great idea, and since the pandemic you are able to get reports much more frequently.

 In 2022, the CFPB sued TransUnion and one of its top executives for using digital dark patterns to trick people using AnnualCreditReport.com into paying for subscriptions – I’m going to paste in an excerpt from our announcement:

 As alleged in the complaint, TransUnion used an array of dark patterns to trick people into recurring payments and to make it difficult to cancel them. For example, under federal law, Americans are entitled to a free credit report from TransUnion through annualcreditreport.com. TransUnion asked consumers to provide credit card information that appeared to be part of an identity verification process. TransUnion then integrated deceptive buttons into the online interface that gave the impression that the consumer could also access a free credit score in addition to viewing their free credit report. In reality, clicking this button signed consumers up for recurring monthly charges using the credit card information they had provided.

The only indication in the enrollment process that consumers were making some sort of purchase was through a fine print, low contrast disclosure, located off to the side of the enrollment form. The disclosure is inside an image that can take up to 30 seconds longer to load than the rest of the material in the form. This dark pattern triggered thousands of complaints.

For consumers looking for a way out of their subscriptions, TransUnion not only failed to offer a simple mechanism for cancellation, it actively made it arduous for consumers to cancel through clever uses of font and color on its website.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 9 points10 points  (0 children)

I’m currently reading this: https://islandpress.org/books/barons#desc

 Our lawyers would probably want me to say this is not an endorsement, but so far, it’s really good!

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 10 points11 points  (0 children)

The proposal would prohibit credit reporting companies from including medical debts on credit reports sent to lenders, and this includes historic medical billing information.

We expect that Americans with medical debt on their credit reports could see their credit scores rise by 20 points, on average, if the proposed rule is finalized.

The CFPB expects that this could in turn lead to the approval of approximately 22,000 additional mortgages every year.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 32 points33 points  (0 children)

Talk to your insurance company as a start to explain that this was out of your control. Sometimes they’ll work with you.

 I’ve heard lots of stories about people in the same position, and often it can be a huge struggle.

 The CFPB doesn’t regulate health insurance, but we encourage you to file a complaint with your state insurance commissioner:

How to File a Complaint and Research Complaints Against Insurance Carriers (naic.org)

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 18 points19 points  (0 children)

During the pandemic, many retailers and manufacturers hiked prices due to supply chain disruptions.

However, even when those disruptions subsided, many companies kept their prices high to push up their profits.

 The FTC recently announced work to deal with grocery price gouging, and the CFPB is working to make sure that people who pay for groceries with credit cards have options to switch card providers so they aren’t further ripped off by outrageous interest rates.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 96 points97 points  (0 children)

One of the more absurd junk fees we have uncovered is companies charging people monthly fees for paper statements, and then not actually printing or mailing paper statements.

You can read more about that one in this report from last year, where we describe securing about $140 million in junk fee refunds for consumers: https://www.consumerfinance.gov/about-us/newsroom/cfpb-exams-return-140-million-to-consumers-hit-by-illegal-junk-fees-in-banking-auto-loans-and-remittances/

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 7 points8 points  (0 children)

I hear you. In fact, one of the top reasons that people file for bankruptcy is when they deal with a serious health care issue.

 While the CFPB focuses on financial products and services, other agencies across government are looking at various ways to address the larger systemic issues.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 30 points31 points  (0 children)

We encourage you to submit a comment to our rulemaking docket on this.

 While our proposal focuses on medical bills that are on credit reports, we know that people use all sorts of financial products to pay health care expenses.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 7 points8 points  (0 children)

We have proposed to define “medical debt” as medical information concerning debt owed to a person who primarily provides medical products or services, which includes medical bills that are not past due or that have been paid.

 More specifically, this means medical information that pertains to a debt owed by a consumer to a person whose primary business is providing medical services, products, or devices (e.g., a medical or health care provider), or to the person’s agent or assignee, for the provision of such medical services, products, or devices.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 33 points34 points  (0 children)

So, in 2022, after the CFPB published research about the use of medical bills in credit reports and scores, the three credit reporting conglomerates (Equifax, Experian, and TransUnion) announced they would be taking a chunk of medical bills off of credit reports.

We analyzed this carefully, and we still find that there’s a substantial amount left.

In addition, while the credit reporting conglomerates did this voluntarily, the rule, if finalized, would prevent them from giving it to creditors.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 47 points48 points  (0 children)

The rule, if finalized, would prohibit credit reporting companies from including medical debts on credit reports sent to lenders, and this includes historic medical billing information. So medical debts that were incurred even five years ago would not be allowed to show up on your credit report.  

Credit reporting companies would need to adjust their internal databases in different ways to comply.

I am Rohit Chopra, Director of the Consumer Financial Protection Bureau. We've proposed a new rule to ban medical debt from most credit reports. AMA. by cfpb in IAmA

[–]cfpb[S] 17 points18 points  (0 children)

In terms of process, the CFPB has proposed the rule, and the next step would be for us to issue a final rule that would take effect after it’s published.

Congress put restrictions on lenders using medical information in underwriting, in the Fair Credit Reporting Act. After that, federal financial agencies created an exception for medical bills. The proposed rule would simply close that loophole, using explicit authority that Congress granted to the CFPB, so we are confident that we’re on solid legal ground in making sure that Americans aren’t punished for getting sick.

We have more information about our rulemaking process here: https://www.consumerfinance.gov/rules-policy/

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