Medical debt and your credit: It's changing and we have an update
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Medical debt in your credit, it is changing, and we have an update.

Now that members of Congress are back from the holiday break, the focus is on Republicans in the Senate trying their hand at the big spending and taxing bill. Marketplace's Nancy Marshall-Genzer reports. The bill would extend the 2017 tax cuts, which are scheduled to expire at the end of this year. It would also boost spending on defense and border security. All that's expensive. The Congressional Budget Office estimates the legislation would increase the federal deficit by almost $4 trillion. But

That upsets Senate deficit hawks who want to lower the bill's price tag. Ron Johnson, a Wisconsin Republican, is calling for a return to pre-pandemic spending levels. Republican Senator Rand Paul of Kentucky wants to drop a provision in the bill that would raise the federal debt ceiling. Other GOP senators, like Josh Hawley of Missouri, object to potential cuts to Medicaid, which provides health care to low-income Americans. Hawley wrote an op-ed in the New York

Times. He said around 21 percent of Missouri residents benefit from Medicaid or CHIP, which insures low-income children. Democrats are not expected to support the legislation, which means Republicans can't afford many defections. The House would have to approve any Senate changes, which would take time. Republicans want the bill on President Trump's desk, ready for his signature by July 4th. I'm Nancy Marshall-Genzer for Marketplace.

U.S. import taxes and general uncertainty about tariffs will slow economic growth this year around the world. That's the calculation from the Club of Larger Industrialized Countries, the OECD, based in Europe. My Marketplace BBC colleague Leanna Byrne has more.

The global economy is losing steam, according to the OECD, which now expects growth to fall to just 2.9% this year and next. That's a downgrade from earlier forecasts. Chief Economist Alvaro Pereira told me, "...a big reason is rising tariffs, especially in the US, where new import duties on steel and cars are adding to costs."

The OECD warns these trade barriers are driving up inflation and choking off business investment. At the same time, global public debt is at an 80-year high. Pereira says countries must bring down spending, broaden tax bases and boost investment in energy grids, housing and digital tech or risk a deep economic slowdown. I'm the BBC's Leanna Byrne for Marketplace. Markets S&P futures are down 0.2%. Nasdaq futures are little changed.

Paying back money borrowed to pay for medical care is seen by many as different from paying what you owe for consumer goods. The debt is seldom from discretionary spending. Coming out of the Biden administration, the Consumer Financial Protection Bureau had finalized a new system to keep medical debt from hurting your credit score.

But under new leadership now, the CFPB is pushing the other way. There's a nonprofit that works to pay off people's medical debt as a charitable endeavor. Alison Sesso is president and CEO of what's called Undue Medical Debt. Welcome. Thank you. I'm so happy to be here. What had been the newish rule that had come in during the Biden administration? Give me just a sense of it.

So medical debt would no longer be on people's credit reports and allow them to not be burdened by having something that happened to them, like getting sick, undermine their ability to access credit. It is clear that credit does not indicate whether somebody or not will pay back a loan. And so this would help at least 15 million people. But just so we understand, I mean, when people hear someone has debt, the general impulse is to say, well, you got to pay your debts.

Many view medical debt as a different animal, a different category. It's very clear that people on the left and the right agree on this point, too, which I think is important to point out. People are no longer buying the moral hazard argument. They very much feel that the system is working against them. The number one predictor of whether or not you end up in medical debt is whether or not you get sick. That is nothing to do with whether or not you're willing to pay or able to pay a loan back.

All right. So the rule to remove almost $50 billion of medical debt from records gets finalized right at the beginning of the year. But a new administration comes to power, no friend of the Consumer Financial Protection Bureau, and there's not much of the CFPB now left.

What's happening? Trump administration is leaning into unwinding this medical debt thing. Yeah, they've really backed out of doing any enforcement on this. And unfortunately, they've actually sided with the debt collectors in the court system. And so we don't see this rule actually being implemented. And unfortunately, this is at a time when we're also seeing proposals in the big

beautiful bill that's been proposed of cutting Medicaid by $715 billion, which is only going to lead to more medical debt. So the impact, unfortunately, on people's credits is going to likely worsen in the future. All right. And at a time that the federal government seems to be moving away from what had been one approach to dealing with this, you

You do have some states that are dealing with this. I think there's about 11 states right now that have actually put laws in place, including places that are a little bit more conservative, like Virginia. There actually are places and state actions that are happening. Even places like Florida have put limits on medical deaths and what can be put on credit reports. Does the massive...

taxing and spending plan working its way through Congress address this at all? It does not. It's only going to make medical debt worse, and it's going to make the cost of getting insurance worse because there's a lot of people that are going to be removed from having

access to health insurance because of the Medicaid cuts. We know that places that didn't expand Medicaid under the ACA have higher rates of medical debt. And that's exactly what we're going to see here. And we recently made a huge purchase of medical debt, $30 billion. And we saw that most of that debt was in places that had not expanded the ACA through Medicaid. Allison Sesso is CEO of a nonprofit called Undue Medical Debt. Thank you so much. Thank you for having me.

And you remember This Old House. These days, it's a radio show and a podcast. Guidance on how to fix or upgrade things over at your place. And this week, they invited me onto This Old House Radio Hour. It's about what I'm learning about rebuilding my house after wildfire. You can listen by signing up free wherever you click for podcasts. Or today, we've included the episode as a bonus in the Marketplace Morning Report podcast feed. In Los Angeles, I'm David Brancaccio.

From APM, American Public Media. Personal finance isn't just about spreadsheets and investing. It's emotional. Talking to your partner about money, negotiating a raise. Even the smallest decisions, like splitting a bill, can bring up feelings of shame or anxiety. I'm Rima Kheys, host of This is Uncomfortable, a podcast from Marketplace about life and how money messes with it.

In this season, we get into topics like workplace drama, tough financial trade-offs, and the quiet tension that builds when love and finances collide. Listen to This is Uncomfortable wherever you get your podcasts.