Vice President Harris is pushing to eliminate billions of dollars in medical debt, aiming to achieve a significant progressive goal that Democrats believe could resonate with voters in the upcoming election. Her economic plan, unveiled last week, involves working with states to wipe out medical debt for millions of Americans, to prevent future debt accumulation due to health issues.
However, the plan’s details remain sparse, and its success hinges on substantial collaboration with both state governments and Congress. With health costs emerging as a major voter concern, medical debt has increasingly become a focal point for Democrats nationwide.
The White House sees Harris’s plan as a step toward greater financial freedom for Americans
Relief from medical debt enjoys broad support, as evidenced by a June AP/NORC poll where half of Americans indicated the government must provide such relief. Allison Sesso, president and CEO of Undue Medical Debt, emphasized that this issue has widespread recognition across the political spectrum.
Approximately 100 million Americans are grappling with medical or dental bills, with a KFF study estimating the total debt at $220 billion, affecting around 20 million individuals with debts exceeding $250. Harris has spearheaded initiatives on medical debt relief, including collaborating with credit reporting agencies to remove unpaid medical debts from credit reports, benefiting about 30 million people.
Harris has also proposed new rules with the CFPB to exclude medical debt from credit score calculations. Although these measures do not directly alleviate existing debt, they aim to improve financial stability. The White House views these policies as steps toward greater financial freedom for Americans.
The timeline for finalizing the proposed rule remains uncertain. Meanwhile, Walz has championed legislation addressing medical debt, including preventing debt reporting to credit bureaus and prohibiting debt transfers to spouses. His connection to the issue, following his father’s death and resulting debt, adds depth to his advocacy.
Despite various efforts, there is no unified strategy for medical debt relief. States have utilized federal funds from the American Rescue Plan to address $7 billion in debt, a measure expected to assist up to 3 million Americans by 2026. However, future funding remains uncertain, and Republican opposition to straightforward debt cancellation persists. Senate Health Committee ranking member Bill Cassidy (R-La.) criticized such measures as temporary fixes that shift the burden to taxpayers.
Recent research casts doubt on the effectiveness of buying and forgiving medical debt, with studies suggesting minimal impact on mental health or financial distress. North Carolina’s innovative program, in collaboration with federal efforts, aims to encourage hospitals to forgive existing debt and prevent new debt through Medicaid incentives. This approach seeks to address root causes and could potentially relieve up to $4 billion in debt.
While the challenge of eliminating $220 billion in medical debt is crucial, the hope is that the broad appeal of this issue will foster bipartisan support. Sesso notes that while political considerations may arise, there is a common belief that financial burden should not compound health crises.
