Comment box Scope: summary, information mainly Tone: neutral Opinion: yes Sarcasm/humor: none The Consumer Financial Protection Bureau (CFPB) is an independent-ish agency whose mission is to...
Comment box
Scope: summary, information mainly
Tone: neutral
Opinion: yes
Sarcasm/humor: none
The Consumer Financial Protection Bureau (CFPB) is an independent-ish agency whose mission is to protect consumer rights and privacy in finance according to the will of Congress.
Today, the Consumer Financial Protection Bureau (CFPB) finalized a rule that will remove an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. The CFPB’s action will ban the inclusion of medical bills on credit reports used by lenders and prohibit lenders from using medical information in their lending decisions. The rule will increase privacy protections and prevent debt collectors from using the credit reporting system to coerce people to pay bills they don’t owe. The CFPB has found that medical debts provide little predictive value to lenders about borrowers’ ability to repay other debts, and consumers frequently report receiving inaccurate bills or being asked to pay bills that should have been covered by insurance or financial assistance programs.
The final rule:
Prohibits lenders from considering medical information: The rule ends the special regulatory carveout that previously allowed creditors to use certain medical information in making lending decisions. This means lenders will also be barred from using information about medical devices, such as prosthetic limbs, that could be used to require that the devices serve as collateral for a loan for the purposes of repossession.
Bans medical bills on credit reports: The rule bans consumer reporting agencies from including medical debt information on credit reports and credit scores sent to lenders. This will help end the practice of using the credit reporting system to coerce payment of bills regardless of their accuracy. Lenders will continue to be able to consider medical information to verify medical-based forbearances, verify medical expenses that a consumer needs a loan to pay, consider certain benefits as income when underwriting, and other legitimate uses.
This seems like a valuable rule that will meaningfully improve people's quality of life. The rule doesn't solve the problem of expensive healthcare in this country, but it may help ensure that wracking up medical debt doesn't derail other parts of people's lives.
The CFPB is part of the Federal Reserve, which is independent from the president and Congress. I learned today that it was originally proposed by Elizabeth Warren in 2007 and created by the Dodd–Frank Act in 2010. Apparently the president can now remove the CFPB director for any reason (according to the Supreme Court as of 2020), and apparently the agency gets a lot of flack from the GOP. Perhaps that is unsurprising given that political party's legislative record. However, it seems like a lot of things the CFPB does are pretty popular bipartisan decisions. At the end of the day, consumers like being protected, and all voters are consumers of something in the economy.
Comment box Scope: information, speculation Tone: neutral, moralizing a bit Opinion: yes Sarcasm/humor: none That is what the CFPB implies in their statement, although it seems like it could apply...
Comment box
Scope: information, speculation
Tone: neutral, moralizing a bit
Opinion: yes
Sarcasm/humor: none
That is what the CFPB implies in their statement, although it seems like it could apply to any kind of medical device. Other examples might be wheelchairs, vision or hearing aids, canes, oxygen concentrators, CPAP machines, dialysis machines, etc.... gross and inhumane concept to hold such things as collateral.
Not clear to me how often this actually happened. I'm guessing not so often because I imagine states specifically banned this practice (it's morally reprehensible), but there were probably some uncovered jurisdictions, like states that hadn't thought about it and most likely the offshore territories and maybe DC. The CFPB's rule is a federal blanket requirement, so it might be partially redundant, but that's fine.
Whether or not it was common, it definitely shouldn't have been possible, and it's good that it will be illegal in 60 days. The unfortunate side effect might be a slight increase in costs for insuring these things, or a decrease in coverage (insurers are already trying to claim prosthetics are "unnecessary" in claims). The market always reacts to regulation. At the end of the day, a better solution would socialize healthcare insurance entirely.
In my opinion the main benefit of this rule is getting debt collectors off the backs of people who HAVE paid their debts, but whose insurers are too incompetent to keep their records accurate. Due to the great incompetence of most corporations, this has unfortunately happened to a lot of people.
Seems to me like a band-aid that could end up causing more problems than it solves. All else being equal, a less accurate credit system is worse than a more accurate one. The actual solution to...
Seems to me like a band-aid that could end up causing more problems than it solves.
All else being equal, a less accurate credit system is worse than a more accurate one.
The actual solution to this problem is to abolish medical debt altogether.
The article said that outstanding medical debt was a poor indicator of people's ability to cover other debts, so (assuming the claim is accurate) this leads to a more accurate credit system, not less.
The article said that outstanding medical debt was a poor indicator of people's ability to cover other debts, so (assuming the claim is accurate) this leads to a more accurate credit system, not less.
A poor predictor is still better than a null predictor — it’s just worse than a good predictor. Sophisticated lenders are already aware of the relative value of medical debt as a predictor and...
A poor predictor is still better than a null predictor — it’s just worse than a good predictor. Sophisticated lenders are already aware of the relative value of medical debt as a predictor and factor it into their risk score accordingly.
A better way to interpret what they are saying is, because it is a poor predictor, the overall impact to lenders will not be very damaging.
I think the phrase “poor predictor” is hiding an enormous amount of important nuance for you or I to be making any claims about it. For example, rolling a handful of dice and counting the pips is...
A poor predictor is still better than a null predictor — it’s just worse than a good predictor.
I think the phrase “poor predictor” is hiding an enormous amount of important nuance for you or I to be making any claims about it.
For example, rolling a handful of dice and counting the pips is a poor predictor of life expectancy, and is certainly worse than a good predictor, but would it be better than a null predictor?
If a health insurance company had a room full of interns rolling handfuls of dice and writing down the result attached to accounts of policy holders, how might an article describe this kind of thing?
I would argue that “poor predictor” is quite likely the phrase that an article would use for this dice method, if they’re not trying to start a fight, and if it’s just a passing phrase as they try to illustrate a larger point.
I've been doing consumer risk modelling professionally since the late 2000s. I can tell you, with absolute certainty, that trade lines are in fact classified and weighted differently depending on...
I think the phrase “poor predictor” is hiding an enormous amount of important nuance for you or I to be making any claims about it.
I've been doing consumer risk modelling professionally since the late 2000s. I can tell you, with absolute certainty, that trade lines are in fact classified and weighted differently depending on their origin, and this has been the case for the entire time I have been in the field. I’ve literally written the code for this, and I didn’t make it up on my own — I followed guidance from other experts in the field.
While medical collections tradelines on credit reports appear as a result of circumstances that differ significantly from other types of collections tradelines, credit scoring models have until recently weighted such items identically to non-medical collections. In a Data Point issued in May 2014, the CFPB examined how medical tradelines reflect the creditworthiness of consumers when compared to other types of collections tradelines. The report found that the presence of a medical collections tradeline on a credit report is less predictive of future defaults or serious delinquencies than the presence of a non-medical collections tradeline.
Two key points:
the CFPB found that over a decade ago, risk scores were already incorporating classifications on medical tradelines (and that's in reference to public facing scores, internal models have been doing it longer);
medical tradelines are only less predictive, not non-predictive.
I think part of the argument is that this is inherently more accurate. Reporting agencies aren't in a position to check the accuracy of (often wrong or mishandled) medical bills. If healthcare...
I think part of the argument is that this is inherently more accurate. Reporting agencies aren't in a position to check the accuracy of (often wrong or mishandled) medical bills. If healthcare providers were able to provide costs up front then it would be a different story, as it'd be more similar to contracts like a mortgage or rental agreement.
It's also truly something you don't have a lot of choice about accruing. Do you want to survive - or remain capable of providing for yourself? Then surprise here's a 6k debt. Paying for housing is...
It's also truly something you don't have a lot of choice about accruing. Do you want to survive - or remain capable of providing for yourself? Then surprise here's a 6k debt. Paying for housing is similar but it's something you can plan in a way that medical care often isn't.
If we'd had to pay for my partner's medical bills he'd be dead. Just flat out we couldn't have paid for it.
Actively paying on a large debt is very very different from having a bill go to collections. Having medical debt isn't a problem as long as you're making payments on it.
Actively paying on a large debt is very very different from having a bill go to collections. Having medical debt isn't a problem as long as you're making payments on it.
Well, it depends on what those payments are and how much they work with you. But my point was you don't have a lot of choice about accruing large debt - you rarely know the amount ahead of time...
Well, it depends on what those payments are and how much they work with you. But my point was you don't have a lot of choice about accruing large debt - you rarely know the amount ahead of time and declining the treatment leaves the individual much worse off.
Paying debt off, navigating asking for relief and setting up payment plans, is a whole other set of hurdles. I'm sure much of medical debt is actually smaller amounts, some of which are unintentional, that get sent to collections - you get so many bills after a hospital visit it can be confusing which are actually bills and when you're done paying, or they fail to collect your copay and you don't realize you'll owe it for this appointment.
There are some places that won't provide some types of care without paying upfront. Especially if it isn't non-emergency/life-saving. My partner and I aren't married so that we don't have to calculate the cost of his care, or a dozen payments on medical bills , because it's not one singular bill, it's the surgeon and the anesthesiologist, and the radiologist and the hospital and the ambulance and the second hospital and the rehab hospital and the in home nursing, and the wheelchair that costs as much as our house.
He'd be dead. Because we couldn't have paid for it.
Absolutely agreed. "Lets not have the record of your life-destroying medical debt harm your credit score" is objectively less correct for a healthy society than "let's not have life-destroying...
The actual solution to this problem is to abolish medical debt altogether.
Absolutely agreed. "Lets not have the record of your life-destroying medical debt harm your credit score" is objectively less correct for a healthy society than "let's not have life-destroying medical debt".
It’s going to be another fucking mess. All of this ignores the elephant in the room that the US medical system at this point is pretty fucked from top to bottom. If you need live saving surgery...
It’s going to be another fucking mess.
All of this ignores the elephant in the room that the US medical system at this point is pretty fucked from top to bottom.
If you need live saving surgery that can only be done by 10 people in the world the US is great and for basically everything else it’s a non functional mess of middle man industries all screwing each other. Even the way we train or classify doctors is HIGHLY suspect in several areas.
I get that compromises like that are needed because “burn it down and damn the consequences” is so extreme, but I suspect you’ll just see more people defaulting on their medical debt followed by other issues elsewhere and maybe some stupid secondary loophole that allows a creditor to track people doing that.
Comment box
The Consumer Financial Protection Bureau (CFPB) is an independent-ish agency whose mission is to protect consumer rights and privacy in finance according to the will of Congress.
This seems like a valuable rule that will meaningfully improve people's quality of life. The rule doesn't solve the problem of expensive healthcare in this country, but it may help ensure that wracking up medical debt doesn't derail other parts of people's lives.
The CFPB is part of the Federal Reserve, which is independent from the president and Congress. I learned today that it was originally proposed by Elizabeth Warren in 2007 and created by the Dodd–Frank Act in 2010. Apparently the president can now remove the CFPB director for any reason (according to the Supreme Court as of 2020), and apparently the agency gets a lot of flack from the GOP. Perhaps that is unsurprising given that political party's legislative record. However, it seems like a lot of things the CFPB does are pretty popular bipartisan decisions. At the end of the day, consumers like being protected, and all voters are consumers of something in the economy.
Excuse me, are you saying prior to this rule that lenders were repossessing (checks notes) prosthetic limbs ?
Comment box
That is what the CFPB implies in their statement, although it seems like it could apply to any kind of medical device. Other examples might be wheelchairs, vision or hearing aids, canes, oxygen concentrators, CPAP machines, dialysis machines, etc.... gross and inhumane concept to hold such things as collateral.
Not clear to me how often this actually happened. I'm guessing not so often because I imagine states specifically banned this practice (it's morally reprehensible), but there were probably some uncovered jurisdictions, like states that hadn't thought about it and most likely the offshore territories and maybe DC. The CFPB's rule is a federal blanket requirement, so it might be partially redundant, but that's fine.
Medical equipment repossession has happened before, some veterans have had prosthetic limbs repossessed. And hospital assets have been repossessed because they didn't pay a debt, but I'm not sure if that's technically covered by this rule.
Whether or not it was common, it definitely shouldn't have been possible, and it's good that it will be illegal in 60 days. The unfortunate side effect might be a slight increase in costs for insuring these things, or a decrease in coverage (insurers are already trying to claim prosthetics are "unnecessary" in claims). The market always reacts to regulation. At the end of the day, a better solution would socialize healthcare insurance entirely.
In my opinion the main benefit of this rule is getting debt collectors off the backs of people who HAVE paid their debts, but whose insurers are too incompetent to keep their records accurate. Due to the great incompetence of most corporations, this has unfortunately happened to a lot of people.
Seems to me like a band-aid that could end up causing more problems than it solves.
All else being equal, a less accurate credit system is worse than a more accurate one.
The actual solution to this problem is to abolish medical debt altogether.
The article said that outstanding medical debt was a poor indicator of people's ability to cover other debts, so (assuming the claim is accurate) this leads to a more accurate credit system, not less.
A poor predictor is still better than a null predictor — it’s just worse than a good predictor. Sophisticated lenders are already aware of the relative value of medical debt as a predictor and factor it into their risk score accordingly.
A better way to interpret what they are saying is, because it is a poor predictor, the overall impact to lenders will not be very damaging.
I think the phrase “poor predictor” is hiding an enormous amount of important nuance for you or I to be making any claims about it.
For example, rolling a handful of dice and counting the pips is a poor predictor of life expectancy, and is certainly worse than a good predictor, but would it be better than a null predictor?
If a health insurance company had a room full of interns rolling handfuls of dice and writing down the result attached to accounts of policy holders, how might an article describe this kind of thing?
I would argue that “poor predictor” is quite likely the phrase that an article would use for this dice method, if they’re not trying to start a fight, and if it’s just a passing phrase as they try to illustrate a larger point.
I've been doing consumer risk modelling professionally since the late 2000s. I can tell you, with absolute certainty, that trade lines are in fact classified and weighted differently depending on their origin, and this has been the case for the entire time I have been in the field. I’ve literally written the code for this, and I didn’t make it up on my own — I followed guidance from other experts in the field.
But, don’t take my word for it. The 2014 report on medical collections from the CFPB (linked from the original document, but there are hundreds of resources out there on this) says:
Two key points:
I think part of the argument is that this is inherently more accurate. Reporting agencies aren't in a position to check the accuracy of (often wrong or mishandled) medical bills. If healthcare providers were able to provide costs up front then it would be a different story, as it'd be more similar to contracts like a mortgage or rental agreement.
It's also truly something you don't have a lot of choice about accruing. Do you want to survive - or remain capable of providing for yourself? Then surprise here's a 6k debt. Paying for housing is similar but it's something you can plan in a way that medical care often isn't.
If we'd had to pay for my partner's medical bills he'd be dead. Just flat out we couldn't have paid for it.
Actively paying on a large debt is very very different from having a bill go to collections. Having medical debt isn't a problem as long as you're making payments on it.
Well, yes and no. Income to debt ratios are important, even if you are somehow managing to make the minimum payments.
Well, it depends on what those payments are and how much they work with you. But my point was you don't have a lot of choice about accruing large debt - you rarely know the amount ahead of time and declining the treatment leaves the individual much worse off.
Paying debt off, navigating asking for relief and setting up payment plans, is a whole other set of hurdles. I'm sure much of medical debt is actually smaller amounts, some of which are unintentional, that get sent to collections - you get so many bills after a hospital visit it can be confusing which are actually bills and when you're done paying, or they fail to collect your copay and you don't realize you'll owe it for this appointment.
There are some places that won't provide some types of care without paying upfront. Especially if it isn't non-emergency/life-saving. My partner and I aren't married so that we don't have to calculate the cost of his care, or a dozen payments on medical bills , because it's not one singular bill, it's the surgeon and the anesthesiologist, and the radiologist and the hospital and the ambulance and the second hospital and the rehab hospital and the in home nursing, and the wheelchair that costs as much as our house.
He'd be dead. Because we couldn't have paid for it.
Absolutely agreed. "Lets not have the record of your life-destroying medical debt harm your credit score" is objectively less correct for a healthy society than "let's not have life-destroying medical debt".
It’s going to be another fucking mess.
All of this ignores the elephant in the room that the US medical system at this point is pretty fucked from top to bottom.
If you need live saving surgery that can only be done by 10 people in the world the US is great and for basically everything else it’s a non functional mess of middle man industries all screwing each other. Even the way we train or classify doctors is HIGHLY suspect in several areas.
I get that compromises like that are needed because “burn it down and damn the consequences” is so extreme, but I suspect you’ll just see more people defaulting on their medical debt followed by other issues elsewhere and maybe some stupid secondary loophole that allows a creditor to track people doing that.