A Trump-appointed federal judge has blocked a rule the Consumer Financial Protection Bureau issued just before Joe Biden left the White House that would have banned medical debt from Americans’ credit reports.
The ruling is a terrible blow to consumers.
CNN reports that “Judge Sean Jordan of the US District Court of Texas’ Eastern District found that the rule exceeded the bureau’s authority under the Fair Credit Reporting Act, agreeing with the arguments of two industry associations, which had filed a lawsuit against the rule that was later joined by the Trump administration.”
The ruling is a terrible blow to consumers, and it pushes the country back toward a preposterous norm of punishing Americans financially for their health issues.
Thanks to our dysfunctional and immoral U.S. health care system, tens of millions of Americans owe medical debt. And on top of having to pay off that debt, an additional indignity for debtors is seeing their credit scores take a hit. That means people of limited financial means who have incurred medical debt are not only paying off onerous medical bills, but then also facing penalties around eligibility and interest rates when they try to do things like open up new credit cards, secure mortgages or get approved to rent apartments.
As I wrote this year when the rule was announced:
On a conceptual level, this new rule underscores how medical debt is different from most other kinds of debt that make up credit reports. It’s not a reflection of how someone wants to spend their money, but of decisions between seeking care or potentially enduring a painful or life-threatening hardship. … In addition, a lot of medical collections are the result of surprise medical bills that emerge even after people think they’ve done everything in their power to avoid incurring medical debt.
The CFPB estimated that the nixed rule would’ve wiped out $50 billion in medical bills from the credit reports of about 15 million Americans. The bureau calculated that would’ve raised credit scores for affected people by 20 points on average, leading to “the approval of approximately 22,000 additional, affordable mortgages every year.” Past CFPB research has also found that medical debt is a “poor predictor” of whether someone will pay back a loan.
That the Trump administration joined the lawsuit against the rule — while effectively shutting down the CFPB — speaks to the priorities of right-wing populism. “The forgotten men and women of our country will be forgotten no longer,” the president declared after his first election victory. But that same president and his GOP allies in Congress cut Medicaid and food stamps and allied with business lobbies against millions of Americans facing crushing medical debt. It’s clear, yet again, whose side Trump is on.
