WASHINGTON–Although the decision was hailed by consumer groups, one senator believes there may be “unintended consequences” from a recent decision by the three major credit bureaus to block certain types of medical debt from being included on consumers’ credit reports.
As CUToday.info reported here, Transunion and Experian said they will change how they report medical debt, which will result in the removal of nearly 70% of medical bills from credit reports. The credit bureaus announced that, beginning in July, they will remove medical debt that has been paid off and unpaid medical debt less than $500. Going forward, they will wait a full year before adding new unpaid medical debts to credit reports.
But during a hearing by the Senate Banking Committee, Sen. Pat Toomey [R-PA.], the leading Republican on the committee, said he is concerned over the unintended consequences of the decision, while also questioning whether the medical debt burdens being faced by consumers is “growing.”
‘Misuse of Power’ Alleged
“What appears to have occurred here was that a political campaign, which included the CFPB, bullied lenders and credit rating agencies into removing this information,” Toomey said during the hearing. “This kind of misuse of power by the administrative state has grown all too common. And it’s an example of how Congress has become far too comfortable with the executive branch seizing the Article I lawmaking authority. We need to be very careful that any actions considered to address symptoms — in this case debt from a health condition — don’t make matters worse. This new credit reporting agency policy doesn’t actually lower the cost of medical care. In fact, it will either raise costs or reduce access.”
Different Views
Toomey’s comments came at the same time Senate Banking Committee Chairman Sen. Sherrod Brown [D-OH], Sen. Elizabeth Warren [D-MA] and other Democrats on the committee called on the CFPB to create a new position at the regulator for a medical debt ombudsman.
Meanwhile, one person testifying before the committee, Prof. David Hyman from Georgetown University, said, “Attempting to solve the problem of medical debt with tweaks to the credit reporting system is the equivalent of treating a symptom instead of the underlying disease.”