The move would offer relief to millions of Americans who need a better credit score to get an apartment or a car, but it would not wipe out their financial obligations.
The Biden administration on Tuesday proposed removing medical debt from the credit reports of more than 15 million Americans, making it easier for them to qualify for car, home and small-business loans.
The proposed rule, which will go through a public comment period, would not take effect immediately. It would forbid health care providers to share medical debt with loan providers and prohibit those providers from factoring in medical information when it came to granting loans.
Vice President Kamala Harris said the move would improve “the financial health and well-being of millions of Americans.”
“One of the most significant consequences of carrying medical debt is the harm it does to a person’s credit score,” Ms. Harris said. “Medical debt makes it more difficult for millions of Americans to be approved for a car loan, a home loan or a small-business loan, all of which in turn makes it more difficult to just get by, much less get ahead. That is simply not fair.”
Medical debt often looms large in the lives of Americans, with an estimated 20 million owing more than $250 to health care providers. Americans who are Black and Latino are more likely to report outstanding bills, as are those who are low income or uninsured. In surveys, Americans have described taking out loans and working extra hours to cover those debts.
As the economy and inflation have soured voters during President Biden’s first term, his administration’s efforts to limit costs have become a focus of his re-election campaign. His aides believe measures such as cutting prices for prescription products like insulin or inhalers are already being felt by voters and will help improve the perception of Mr. Biden’s domestic agenda. The president has also relied on such economic achievements to convince voters of color — a base of his constituency — that he has delivered on his racial equity agenda, even as more sprawling proposals have been blocked by the courts.