Biden-Harris administration backs action to cut medical debt

The Centers for Medicare and Medicaid Services on July 26 approved a North Carolina plan to use the state’s Medicaid system to alleviate medical debt and prevent new debt from accumulating for patients.

“I applaud North Carolina for setting an example that other states can follow by advancing a plan that has the potential to relieve $4 billion in medical debt for two million individuals and families,” Vice President Kamala Harris said in a statement.

“As someone who has spent my entire career fighting to protect consumers and lower medical bills, I am committed to continuing to relieve the burden of medical debt and creating a future where every person has the opportunity to build wealth and thrive.”

According to a Peterson-KFF analysis of health care data published in February, people in the U.S. owe at least $220 billion in medical debt, with 14 million people (6% of adults) owing more than $1,000.

In Pennsylvania, 7% of adults — about 690,000 people — said they owed medical debt, below the 8.6% of the overall U.S. population in a similar situation.

The Biden-Harris administration has stated that its goal is to use the power of the federal government to forgive $7 billion of medical debt by 2026. Harris said that since taking office in January 2021, President Joe Biden’s administration has forgiven over $650 million of this debt.

One path the administration used to advance its goal was through the 2021 American Rescue Plan. Funds from the plan were sent to local governments, which partnered with nonprofits to purchase and assume medical debt for qualified households. Harris provided the deciding vote for the Rescue Plan to become law, after it was unanimously opposed by Republicans in the Senate.

In June, the Consumer Financial Protection Bureau proposed a federal rule that would remove medical debt from credit reports. In a release, the agency said that when implemented, the rule would lead to increased credit scores and loan approvals, while preventing debt collectors from using the credit reporting system to coerce people to pay.

In contrast to Biden’s actions, former President Donald Trump opposed legislation like the Affordable Care Act (also known as Obamacare), which provides health insurance subsidies for millions. Trump backed unsuccessful legislation to repeal the law.

Project 2025, a right-wing policy document crafted by many officials who previously served under Trump and who back his current presidential campaign, has proposed repealing several provisions of the 2022 Inflation Reduction Act that have reduced drug prices.

According to the Center for American Progress, the Project 2025 proposal would increase prescription drug costs for more than 18 million Medicare recipients across the country, including more than 829,000 based in Pennsylvania.