PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

KERRIGAN IN THE WASHINGTON TIMES: The Right Way to Deal with Medical Debt…Beware of CFPB Overreach

By at 5 June, 2024, 5:38 pm

A new Washington Times OP-ED by SBE Council president & CEO Karen Kerrigan notes substantial and harmful regulatory activity within federal agencies, where regulators are not taking required steps to properly consider and quantify the small business impact of their vast rulemakings. The outcomes are not only costly, but often come with various unintended consequences for small businesses and consumers. Specifically, Kerrigan takes note of Consumer Financial Protection Bureau (CFPB) efforts related to medical debt erasure for credit reporting and what this could mean for small medical and health care providers, small to mid-size financial institutions, and by extension consumers. She writes:

The concept comes with a range of unintended consequences. It overlooks sensible practices in credit reporting that consider medical bill timing issues and other factors.

Naturally, many financial institutions are concerned that without accurate and appropriate data related to debt, it would be difficult to make decisions regarding credit, financing or mortgage requests and underwriting risk. Without this critical data, there is no doubt that banks and credit unions would pull back on lending, which not only undercuts their core business purpose but also means that many consumers could be denied access to financing.

Kerrigan adds that this is an industry dominated by small to mid-size businesses that play a significant role in local economies. The same goes for the healthcare and medical providers that would be impacted by rules that work to reduce incentives for consumers to pay their medical bills.

On average, between 90% to 95% have no more than 20 employees. These doctor’s offices, clinics, medical and diagnostic laboratories, outpatient clinics and specialty providers need revenue to keep their doors open. Many of these providers are already racked by government rules and an insurance system bureaucracy, making it difficult to predict cash flow and serve patients and clients efficiently…Added pressures that may come with higher bill delinquencies would translate into higher patient fees and costs. Also, the trend in advance billing for surgeries or other procedures could accelerate, meaning less access to health care for many.

Kerrigan points to consumer-focused practices and innovations that have emerged to help Americans build credit. The CFPB needs to consider these positive steps and programs (along with the harmful consequences noted above) before taking final action, which could negatively disrupt the delivery of financial services and health care for millions of Americans.

Read the full OP-ED here.

 

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