OPINION:
For too many Americans, a medical bill can be more than a financial burden. It’s a source of stress that overshadows their ability to recover and thrive.
Medical debt is often unexpected and can quickly pile up, leaving people in a tough financial spot. Sadly, this is a reality for millions.
We need to help patients by rewarding them for the steps they take to manage their debt responsibly.
Most people want to pay their medical bills on time, but when they do, it is rarely reflected in their credit score. That’s where positive credit reporting can help.
The Reporting Medical Debt Payments as Positive Consumer Credit Information Act of 2024, introduced by Reps. Don Bacon, Nebraska Republican, and Marie Gluesenkamp Perez, Washington Democrat, would change that. The bill would ensure that when patients make on-time payments toward their medical debt, it helps build their credit — just like when they make mortgage or car loan payments.
Instead of being punished for missing a payment in tough times, patients can improve their credit scores while they pay off their medical bills at a manageable pace and build their financial health.
As Mr. Bacon explained, “If you’re working hard to pay off your medical bills, you should be able to see it reflected in your credit score.” This legislation helps ensure that patients can recover both physically and financially.
Positive credit reporting isn’t a new idea. It’s already working in other areas, such as rent payments.
A study by the Credit Builders Alliance demonstrated that when rent payments were added to credit reports, renters saw a boost in their credit scores — especially those who had little or no credit history. In another study from the Department of Housing and Urban Development, the number of renters with no credit score dropped dramatically when rent reporting was implemented.
These approaches offer more constructive solutions than the Consumer Financial Protection Bureau’s proposed rule to remove medical debt from credit reports. As detailed in a recent op-ed from Brian Johnson, its former deputy director, the CFPB typically identifies a market failure before issuing a proposed rulemaking. The CFPB, however, failed to do so for this particular proposed rule.
Moreover, the CFPB has acknowledged that the market is already self-correcting. The three major credit reporting agencies have removed paid medical debt from credit reports and stopped including unpaid balances under $500.
Medical debt is different from other types of debt. It’s not volitional, and it’s usually unexpected. Solutions such as positive credit reporting are important.
At Capio, we’ve implemented a Patient Bill of Rights to ensure that patients are respected, not charged interest or fees and never sued for unpaid medical debt. This is part of our commitment to doing right by patients — because they deserve to be treated with respect, dignity and compassion.
We’ve also contracted with BuoyFi, which uses a tool to verify income data and medical debt balances and help patients determine what they can afford to pay. This free service has helped many people manage and resolve their medical debt without putting their financial future at risk. BuoyFi has saved patients an average of 75% off their original balances.
The medical debt problem is too big to solve overnight, but we can take steps right now that would make a huge difference for patients. We believe that positive credit reporting is one of those steps. It would allow people to manage their debt responsibly and build their credit while keeping our health care system financially sound.
The CFPB recently closed the comment period for a proposed rule that would require the removal of medical debt from consumer credit reports. While it’s clear that something needs to be done about medical debt, it is not at all clear that removing the debt from credit reports is the best solution for patients.
As policymakers and industry leaders debate the best way to handle medical debt, let’s not lose sight of what’s really at stake — people trying to stay afloat in a system that can be difficult to navigate. It’s time we embrace solutions that put people first, and positive credit reporting is a good place to start.
• Mark Detrick is CEO of Capio, a leader in creating compassionate solutions that help patients achieve financial wellness.
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