Someone is standing up to the Consumer Financial Protection Bureau and its plan to prohibit medical debt from appearing on consumers’ credit reports. An editorial in today’s Wall Street Journal criticizes the plan, which will “make it easy to wave away hundreds of billions of dollars in medical debt” by providing “perverse incentives.”
A copy of the editorial can be accessed by clicking here.
The current measures already put in place — not including medical debts under $500 and prohibiting any medical debts from appearing on a consumer’s credit report for a year after the debt is incurred — already protect consumers without any need for further action. Eliminating credit reporting isn’t about giving debt collectors “leverage” as the CFPB put it, the editorial says, it’s about providing debt collectors and healthcare providers with the only tool they can use to encourage debtors to pay. If it’s not going to show up on a credit report, where is the incentive to repay the debt, the editorial asks.
Taking that line of thinking a step further, the Journal posits that if enacted, the rule would eliminate the incentive for people to carry health insurance at all. “Why would a young, healthy person pay hundreds of dollars every month for insurance if he needn’t pay for the cost of an emergency or unexpected illness if he doesn’t carry insurance?”
Creditors would be kept in the dark when making underwriting decisions because they wouldn’t have a complete picture of a consumers’ full debt repayment responsibilities, meaning individuals who don’t pay their healthcare bills won’t be charged higher interest rates for other things, which the editorial points out, “may be the real point of the rule.”
