More Comments About Medical Debt Credit Reporting Proposal Submitted

Dear CFPB Rulemaking Committee,

As a small business specializing in purchasing medical debt, PARC is writing to express our strong opposition to the proposed rule regarding the credit reporting of medical debts. We believe that this rule, while perhaps well-intentioned, could have serious negative consequences for our clients, including doctors and healthcare providers, and ultimately for the broader healthcare system and consumers.

Impact on Healthcare Providers, Our Clients, and Consumers

Our clients, who are primarily doctors and healthcare providers, rely on the ability to collect on outstanding medical debts to sustain their operations and continue providing essential care. The proposed rule would significantly hinder their ability to recover these debts, leading to financial strain or even closure for smaller practices. This financial strain will not stop at the providers; it will inevitably be passed on to consumers in the form of higher costs for medical services, reduced access to care, and potentially lower quality of care as providers struggle to manage their finances.

Insufficient Cost-Benefit Analysis

We are concerned that the cost-benefit analysis of this rule has not been thoroughly studied. The potential costs to healthcare providers, the increased burden on the collections process, and the ripple effects throughout the healthcare industry seem to have been overlooked. Without a comprehensive understanding of these impacts, the rule risks doing more harm than good.

CFPB as a Political Arm

It is also our view that the CFPB is acting as a political arm rather than an impartial regulator in this instance. The complexities of the U.S. healthcare system and the challenges of medical debt require a more nuanced approach than the one currently proposed. This issue is too important and too complex to be resolved through a rule that has not been sufficiently vetted.

A Call for Comprehensive Legislative Action

Rather than rushing through a rule that may have unintended consequences, we urge the CFPB to hit the brakes on this proposal. The issue of medical debt and its impact on credit reporting is akin to putting a band-aid on a gunshot wound – it’s an inadequate solution to a much larger problem. We strongly believe that this matter should be addressed comprehensively by Congress, with input from all relevant stakeholders, including healthcare providers, the financial industry, and consumer advocates.

Conclusion

In conclusion, we strongly oppose the CFPB’s proposed rule on credit reporting of medical debts. We believe it will harm healthcare providers, reduce access to necessary medical services, increase costs for consumers, and fail to address the underlying issues in the U.S. healthcare system. We urge the CFPB to reconsider this rule and to allow for a more thorough study and legislative process to address this critical issue.

Thank you for considering our comments.

Chris Conway – CEO PARC

I am writing to express my opposition to the proposed rule by the Consumer Financial Protection Bureau (CFPB) that seeks to prohibit health care providers from reporting most medical debt to credit bureaus. This will greatly reduce the incentive for consumers to pay for their medical services. Our business saw a 25% reduction in recovery based on the elimination of balances under $500 being reported to the credit bureaus. Due to the reduction in revenue, medical providers will have to reduce their services leading to shortages and delays. Medical providers are required to make tremendous financial and time commitments in their training. This becomes a huge disincentive for talented individuals to enter these fields. Thus, the shortage of qualified providers in our country will increase. Those communities this proposal is looking to assist, will in the long term be impacted by dangerous reductions in health care availability.

Asking medical providers to now seek federal assistance, when our country is already generating trillions of dollars per year in deficits is irresponsible. Asking medical providers to seek remedy via the already swamped court system is inefficient.

I urge the CFPB to work closely with their allies in the educational system to increase financial literacy around topics of insurance, credit scores, budgets, etc. to prepare consumers for their future financial responsibilities.

Thank you for your consideration

John Berquist

While I understand WHY the CFPB is proposing this rule, I would like to give the other side of the story. I am a debt collector.1) Since the 3 credit reporting agencies stopped credit reporting balances under $500, my smaller medical clients (dental offices, private practices) have seen a BIG deduction in collections2) For one particular client, we calculated that collections went from 43% to 12% in one year. This dental office is looking to merge with a larger group as they cannot keep taking hits to their ability to get paid.3) In NY, we now have no consequence for not paying your medical bills: we can get a judgment, but cannot get a lien or garnish wages. We have heard multiple times that there are no consequences for not paying their medical bill, so they do not pay. We actually know of people that are discontinuing their health insurance since there is no consequence! THIS IS PROBLEMATIC!!!4) There are multiple sources on TikTok and Instagram advising consumers that in NY since they do not credit report, there is no consequence for not paying their medical bill. The more people get away with not paying a bill, the more they will just not pay.5) As with everything, let’s look at a compromise:Credit Bureau reporting SHOULD remain on credit reports BUT, have medical debt weigh much less than other debt. At least if it is on their credit report the consumer has a monthly reminder that they owe the debt.6) These providers deserve to get paid. They have expenses too. If there is no consequence for not paying, many consumers WILL NOT pay. Again, collection rate went from 43% down to 12% as a direct result from taking away credit reporting.7) I have a family member in banking who stated that since they cannot rely on credit reports to be an actual good snapshot of a persons propensity to pay, that they are being a lot more stringent on their mortgage applications.

Medical debt—usually due to sickness or accidents—burdens people nationwide. When these debts appear on credit reports, people have trouble securing employment, housing, mortgages, or other necessary services. They may avoid needed medical care in the future. Moreover, information about medical debt is often inaccurate and error-ridden.

The CFPB issued a new regulation to stop credit reporting agencies from using medical debt in credit scores. Medical debt will not even appear on consumer credit reports. The rule will bar debt collectors from using medical devices as loan collateral.

I support CFPB’s new rule regarding medical debt reporting.

As a business owner working with several rural non-profit DSH certified hospitals in Missouri, our employees have seen a significant decline in consumer willingness to setup monthly payments ($25 or more) for balances due after insurance. Consumers tell us that it is not impacting their credit and they do not intend to pay. Unfortunately, many of these consumers are then subject to review for involuntary payment through suit – increasing to cost to all parties. Many small hospitals struggle to keep trained healthcare providers and employees. Their cost to collect each dollar of revenue is ten times other industries (Beckers Report). Missouri is losing hospitals and emergency rooms. This is not a good solution – it is tantamount to announcing to consumers they do not have to pay their medical debts. Thank you.

To Whom It May Concern:

I am writing to express my concerns about the proposed rule CFPB-2024-0023, which seeks to expand the Fair Credit Reporting Act (FCRA) to encompass data brokers as “consumer reporting agencies.” As the Director of Operations for a company within the medical debt industry, I am deeply concerned about the potential implications of this rule on both a personal and professional level.

From a personal standpoint, I fully support efforts to enhance consumer privacy and protect sensitive information. However, the broad nature of this proposed rule could inadvertently affect individuals like myself who rely on the efficient management of data to access critical financial services. The reclassification of data brokers under the FCRA could lead to increased costs and reduced accessibility to essential services, particularly those that help manage medical debt.

For many people, particularly those with significant medical debt, data-driven solutions play a crucial role in negotiating payments, finding financial assistance, and managing their overall financial health. Any disruption to these services could have serious personal consequences, making it more difficult for individuals to recover from financial hardships caused by medical expenses.

In my professional capacity as Director of Operations, I oversee the processes that help our clients navigate the complex landscape of medical debt. The proposed rule threatens to impose significant compliance burdens on businesses like ours, which could undermine our ability to effectively serve those struggling with medical debt.

The ambiguity in the rule’s language regarding what constitutes a “data broker” and the types of data covered is particularly concerning. In the medical debt industry, we rely on accurate and timely data to assist our clients in managing their debts and working towards resolution. The increased regulatory scrutiny and compliance requirements could not only raise operational costs but also slow down our processes, ultimately harming the very consumers the rule aims to protect.

Moreover, smaller companies in the medical debt industry, which often operate on thin margins, may find it impossible to absorb the additional costs of compliance. This could lead to industry consolidation, reducing competition and limiting the options available to consumers who need specialized assistance with their medical debts.

In conclusion, while the intention behind CFPB-2024-0023 is understandable, its current form poses significant risks to the medical debt industry and the consumers we serve. I urge the CFPB to take into account the potential unintended consequences and to work towards a more balanced approach that protects consumer privacy without undermining the services they depend on.
Thank you for your attention to these concerns.
Sincerely,
Christie Harding

Medical debt should not exist. It is the result of a broken system that puts profits over patients. No one purposefully goes into medical debt, and ruining peoples futures by tanking their credit scores with debt they accrued from care needed to treat accidents and illnesses, or even routine medical care is astonishingly unethical. On top of that, it makes no sense to link someone’s creditworthiness to their ability to pay for medical care. I urge you to enact the strictest possible regulations in banning the reporting of medical debt on credit reports, and take further steps to ensure healthcare facilities stop driving patients into debt.

I strongly believe that medical debt should not exist and that we should be working toward debt abolition solutions provided by means of hospital foundations and state and federal government coffers forgiving and buying up debt for pennies in the dollar. I ultimately also believe we should provide universal health care.

In the interim, we should not hold this debt against individuals on their credit reports and further harm their ability to access credit and housing.

The Small Business Alliance and affiliated organizations urge you to approve the proposal to ban medical debt from credit reports and finalize these regulations in the strongest possible form, with no concessions to debt profiteers. Please beware of all of the paid lobbyists representing healthcare industry execs, big banks, and debt collectors fighting to make these rules weak and ineffective and attend to the needs of the large majority of the American people who have been harmed by the lack of public health care (super hard for small business owners and those who work here, and makes us less competitive abroad) and the life-changing and extractive medical debt profit system in the US. It’s time to serve the people instead of these exploitive special interests.

I would like to comment on the proposed rule regarding credit reporting of medical debt.

It is important to recognize that reporting a debt, (a financial encumbrance) should not be considered a comment on the character or trustworthiness of a consumer. It is simply an indicator of whether the consumer is able to repay credit that is being requested.

The argument has been made that, because medical debt is not intentional, it is, somehow, not really debt and should not be credit reported. But there are all sorts of debts that are unintentional, yet they are still valid obligations such as emergency home repairs after a disaster or debt from damage to property from an automobile accident. Are we suggesting that there is no responsibility to pay for these things as well? Of course not.

The reality is that medical debt is a real financial obligation that creates an actual encumbrance on a consumer’s finances. And that debt should be considered to determine risk when granting credit. A credit grantor should have a full picture of the consumer’s financial obligations to determine the likelihood of being repaid. Without that information, the credit industry runs the risk of repeating the mortgage crisis of the early 2000s.

Imagine a lender, granting a loan and then not being able to be paid back because the borrower has an undisclosed medical obligation that they also are required to pay. Not disclosing it does not make it any less real.

The CFPB has suggested that the remedy for medical providers to receive payment from the consumer is to take legal action instead of to credit report the debt. It seems to me that this is worse than credit reporting.

Imagine being a mortgage lender and finding that the borrower had an undisclosed medical obligation that has now become a court judgment, which is now a lien on the property and the borrowers wages or bank account has now been garnished to enforce the judgment, resulting in an inability by the borrower to pay the loan. As a result, the lender now has to foreclose on the property, with a lien on it and the borrower loses their home and has a foreclosure reported on their credit. How does this help the borrower?

Ignoring medical debt allows consumers to incur financial burdens that they simply cannot afford, which harms them, their creditors, and the financial system as a whole.

Surely we are not suggesting that medical professionals, who take an oath to help people in medical need and, indeed, are required by law to do so, don’t deserve to be paid or their services. Just a few years ago we were applauding doctors and nurses for putting their own lives at risk to care for patients during the Covid pandemic. Have we forgotten them now? Do we no longer value health care professionals? When did this change? Let’s not penalize our valued healthcare professionals for doing their jobs. They are not the problem.

There is no doubt that medical costs are very high and this can create a serious financial burden for consumers. But pretending that the burden doesn’t exist is not a solution. Rather, the solution is to find ways to reduce the costs of medical care in the fist place. Other countries around the world have been able to accomplish this. In fact, many Americans travel outside of the country as “medical tourists” to take advantage of lower medical costs. Why can’t we do this in the USA? Let’s take a page from their playbooks and figure out how to reduce those costs on the front end rather than just ignoring them on the back end.

I oppose the proposed rule because it hurts consumers, credit grantors, medical professionals and the credit system.

Thank you.

When there are no consequences for unpaid medical bills, people are consistently choosing not to pay. This results in medical offices establishing new procedures. More medical visits are required to be paid upfront. Also, medical offices are requiring credit cards to be on file prior to the appointment. The other option- Care Credit which charges 32.99% making medical debt much more costly.

If a patient does not have credit card and cannot pay for the appointment, they cannot receive medical care. This is a direct result from not having the ability to credit report medical debt! (At all in Connecticut & NY)

The medical debt we report are co-pays, deductibles, patient responsibility. Not amounts that would bankrupt an individual getting seriously ill.

Also, people in the industry that make a living collecting debt due medical offices can no longer stay in business. This results in leaving offices (landlord is unable to rent space) and employee layoffs.

There is no reason to not allow medical debts to be reported to the 3 bureaus. Considering that it is a legitimate debt.