Forgiving medical debt has high cost
ANOTHER VIEW | WALL STREET JOURNAL
The Biden administration is canceling student loans and easing mortgage payment terms. Now the
The
Chopra says noting the nonpayment of medical bills is unfair given the vagaries of illness. But this is a reason to carry health insurance. Very few Americans with insurance rack up enormous medical debt. Affordable Care Act plans have deductibles and copays, but the ACA's subsidies can off set premiums. Patients often prioritize other loan payments so cars aren't repossessed or homes foreclosed. A credit-report blemish is the only tool health care providers have to encourage payment.
Credit-reporting agencies in recent years have removed delinquent medical debt that has been paid, as well as debt that is less than
Medical debt affected the credit scores of roughly 15 million Americans as of
Removing a credit notice for not paying medical bills will result in more unpaid bills. It also will reduce the incentive to buy health insurance, which will undermine the administration's goal of increasing coverage.
Providers will raise prices charged to insurers to compensate for unpaid bills, which will push up premiums. Providers also say they'll demand more upfront payments for care, which could reduce access for low-income patients. This is simple economics.
But this
The administration also is stealthily reducing payments for struggling homeowners to prevent foreclosures. This limits housing supply and pushes up prices.
The president's endless debt relief makes credit scores less indicative of creditworthiness. Don't be surprised if lenders rely more on income, resulting in less credit for lower-income Americans who pay their bills. It will be another case in which Biden's policies to buy votes do more harm than good.
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