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In a sea change, the Biden administration will ban medical debt from credit reports
In a sweeping shift that could improve the ability of millions of Americans to own a home or buy a car, the Biden administration on Tuesday will propose a rule to ban medical debt from credit reports.
The rule, which will be announced by Vice President Kamala Harris and Consumer Financial Protection Bureau Director Rohit Chopra, comes as President Joe Biden steps up his efforts to convince Americans that his government is cutting costs, a key concern for voters in the next elections.
The rule, which is in it works since September, could take effect next year, Chopra told ABC News in an exclusive interview before the policy was announced.
Rohit Chopra, director of the Consumer Financial Protection Bureau, speaks during a hearing in Washington, DC, USA, on Thursday, May 9, 2024. (PHOTO: Tierney L. Cross/Bloomberg via Getty Images)Bloomberg via Getty Images
“Our research shows that medical bills on your credit report don’t even predict whether you’ll pay off another type of loan. This means that people’s credit scores are being unfairly and inappropriately harmed by this practice,” Chopra said.
The CFPB investigation estimates that the new rule would allow 22,000 more people to be approved for secure mortgages every year – meaning lenders could also benefit from the positive impact on people’s credit scores by being able to approve more borrowers.
Some major credit reporting companies have already stopped using medical debt to calculate people’s creditworthiness, including Equifax, TransUnion and Experian. FICO and VantageScore have also recently started factoring less medical debt into their scores.
But 15 million Americans still have $49 billion in medical debt that is hurting their scores, the CFPB says. found. This rule would extend the practice to all credit reports in the U.S.
Medical debt is extensive in the US. Affects two in five Americans, according to the health policy research organization KFFand the vast majority have debts in the thousands.
When these debts go into collections, credit scores take a hit, meaning car and home loans are harder to get or are only offered at high interest rates – leading to a slippery slope for people who are already struggling with their bills.
Lexi Coburn, 33, first faced this problem almost a decade ago. She incurred medical debt in 2013 when she was 23 and uninsured.
Her feet were too swollen to walk, so she went to the emergency room, not knowing where else she could go to get medical care without insurance. They told her she had early-onset arthritis.
The $425 bill from that visit wasn’t in Coburn’s budget, so she didn’t pay it. Growing up, her family often didn’t have the income to cover medical expenses, she said, and she felt ill-equipped to navigate the medical system differently as a young adult.
Although she was later able to enroll in health insurance through the Affordable Care Act, Coburn’s medical debt still grew to more than $2,300 — including another $1,532 for dental care and a separate emergency room visit, both in 2019.
The consequences became clear when she tried to get a car.
“Immediately, my medical debt prevented me from qualifying for a good loan that didn’t have an exorbitant monthly payment,” Coburn said.
“The most frustrating aspect for me was when I was in my early 20s, when I wasn’t making much money and needed transportation to get to work,” Coburn said.
Medical bill macro includes test/x-ray/laboratory/surgery (PHOTO: Getty Images)Lbodvar/Getty Images
She saw a dangerous financial cycle building up. Coburn’s bills and subsequent low credit score prevented “being able to prosper enough to pay off the debt,” she said. “So it felt like a domino effect.”
The CFPB’s new rule also seeks to address the issue of incorrect, confusing and complicated medical bills, which often lead to long, drawn-out disputes between patients and billing departments – a complaint that the CFPB, as the agency charged with empowering the consumer, receives en masse, Chopra said.
“We often see that people receive inaccurate bills. Many patients are fighting over these bills for months, only to find them showing up on their credit reports,” he said.
Experts supporting the CFPB’s proposed rule also point to the already low success rate in collecting medical bills.
“We know empirically that repayment rates are incredibly low for medical debt, and so it’s already true that people aren’t actually paying it off. So I don’t think this policy change is going to change behavior that dramatically,” said Matt Notowidigdo, a professor at the University of Chicago Booth School of Business who studies health economics.
Linda Davis, a 61-year-old resident of Grand Rapids, Michigan, has chronic obstructive pulmonary disease, a type of lung disease, and uses a power wheelchair due to a lower back injury. She said she doesn’t think she will ever pay her medical bills, which she estimates to be between $45,000 and $50,000.
“People might be mistaken and think, oh, well, she has Medicare, she’s all set. This is not the case and it can ruin your entire life. It takes control of your entire life,” Davis said.
She said her monthly income covers rent, electricity, cell phone bills and groceries, but she has no room in her budget for medical expenses.
“You discover [after the procedure], you have all these medical bills and what should you do with them all? You know, there’s no way on God’s green earth I can pay all those medical bills. Even if I paid a small amount every month, I wouldn’t live long enough to pay them all off,” Davis said.
For Notowidigdo and many other health economists, addressing the root cause of America’s medical debt issue would mean enrolling more people in adequate health care coverage from the start, “rather than dealing with unpaid medical bills due to lack of insurance or for insufficiently generous insurance on the back end,” he said.
Of course, for now, these high bills and low reimbursement rates are already a challenge for hospitals and health systems.
Vice President Kamala Harris speaks at the Prime Osborn Convention Center on May 1, 2024, in Jacksonville, Florida. (Photo by Joe Raedle/Getty Images)Joe Raedle/Getty Images
If the CFPB rule leads to fewer people paying their bills, it could be patients who suffer, some experts warned.
Ge Bai, a professor who studies healthcare accounting policies at Johns Hopkins University, predicted that hospitals will have to make up for this loss in other ways. Stricter payment efforts, such as requiring payment before patients receive medical care, could leave low-income patients worse off.
“I think in the short term it will be great news for patients and we will probably see patient advocacy groups promoting this. However, I think in the long term, when the long-term negative effects emerge, we will probably see more resistance,” Bai said.
Industry groups such as the Association of Credit and Collection Professionals have voiced Bai’s concerns.
“There is too much at stake for Americans’ access to quality health care by taking actions that only negatively affect cash flow for the health care community without finding ways to replace those funds,” said ACA CEO, Scott Purcell. he said when the CFPB first announced it was reviewing the policy change.
Chopra rejected the notion that more people will default on their healthcare debts as a result of the rule, saying they will still face other penalties that come with the debt.
“These people will still be subject to collection actions, lawsuits and more. There are many ways people are penalized for not paying their bills. I just don’t want to see the credit reporting system used as a weapon against people who have already paid them off,” Chopra said.
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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