House Republicans Slam CFPB’s Medical Bill Proposal

House Republicans are attacking a proposal that would remove medical bills from consumer credit reports.

The Consumer Financial Protection Bureau (CFPB) issued its proposed rule in June, quickly drawing a rebuke from Rep. Patrick McHenry, the North Carolina Republican who heads the House Financial Services Committee.

On Thursday (Aug. 15), McHenry and other Republicans on the committee wrote to CFPB Chairman Rohit Chopra expressing their concerns about the proposal.

“The CFPB’s recent notice of proposed rulemaking restricting inclusion of medical debt in credit reports and scores will undermine underwriting processes and increase risk in the financial system, to the detriment of consumers,” the letter reads. “This effort will have significant negative effects on access and affordability of credit for all consumers, and particularly for low-income borrowers.”

The letter goes on to argue that the Fair Credit Reporting Act (FCRA) requires credit reports to be accurate and complete and that including medical debt in those reports fits this requirement.

“The CFPB does not provide sufficient data in the proposed rule to support its claim that there are more inaccuracies in reporting of medical debt than other types of debt,” the letter adds.

The legislators argue that the proposal will lead to important debt information being withheld from creditors, leading to negative consequences such as consumers being approved for mortgages despite having “hidden” default risks.

In addition, medical providers could begin “requiring additional upfront payments for procedures as they will have less assurance of payment after the procedure occurs, limiting access for vulnerable consumers who cannot afford to pay in full.”

The bureau’s proposal would block credit reporting companies from sharing medical debts with lenders and would prevent lenders from using medical information in making lending decisions.

“Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans,” Chopra said in a news release.

The rule would shut a “regulatory loophole” that has kept “vast amounts” of medical information in the credit reporting system, the CFPB added in the release.

While Congress has barred lenders from accessing or using medical information, including information about debts, federal agencies have since issued a special regulatory exemption that allows creditors to use medical debts in their credit decisions.