Biden faces heavy lift with pledge to end medical debt

President Biden’s promise to eliminate medical debt at a rally earlier this month was welcomed by advocates and will likely appeal to plenty of indebted voters — but it won’t be easy given Americans currently owe about a quarter trillion dollars in medical arrears. 

Earlier this month in Detroit, Biden issued the campaign promise during a speech in which he laid out his plans for his first 100 days in office if he’s reelected to a second term. 

“We're going to end medical debt. By that I mean we've already made sure medical debt can no longer be put on your credit report. You can wipe out medical debt for pennies on the dollar,” Biden said. 

Though he didn’t specify how this would be accomplished, his remarks are reminiscent of the work of the nonprofit Undue Medical Debt, which buys out medical debt and absolves patients from having to pay it back. 

“I, and the whole Undue Medical Debt team, are heartened to see this uniquely American crisis getting the attention it deserves from policymakers at the federal level — and all levels of government,” said Allison Sesso, president of Undue Medical Debt, when asked about Biden’s remarks. 

Sesso’s organization works through partnerships and campaigns at the local level, negotiating with local hospitals willing to sell their debt. City and state governments across the country have harnessed federal dollars to relieve residents of medical debt, but it remains unclear if the federal government could do this for the entire country. 

Undue Medical Debt has relieved nearly $12 billion in medical debt since 2014. Nationally, Americans owe about $220 billion in medical debt.

“It's still early days to speak concretely about what ending medical debt in a second Biden term would look like,” Sesso said. “We’re open to working closely with this administration and future ones to advise on policy fixes and leverage our unique, national model in a way that’s effective and additive.” 

Since assuming office, the Biden administration has taken steps to address the impact of medical debt, the most significant of which was barring the inclusion of medical debt on credit reports, with administration officials arguing medical debt is not a good predictor of someone’s credit worthiness. 

While this move has the potential to help people more easily obtain car loans or mortgages, it does not address the existing debt or prevent future medical debts from being incurred. 

Sesso said that “federal policy makers must address upstream policy changes to make health insurance more comprehensive and affordable for everyone and balance the needs of health care providers.” 

Biden’s stated goal of eliminating medical debt echoes the promises he made on the campaign trail in 2020 when he vowed to eliminate student debt. The administration announced Thursday it would be forgiving another $1.2 billion in student loans, primarily benefiting teachers, nurses, law enforcement officers and first responders. 

His administration’s efforts on student loans during his first term have been fraught and tangled up in court battles. A federal appeals court recently blocked Biden’s student loan repayment plan, stopping all aspects of the plan for the time being. These legal battles are possibly foretelling what a federal medical debt elimination plan may face. 

Forgiving outstanding student loans, most of which are federally owned, is starkly different from eliminating medical debt, which more often stems from the private sector. 

“One of the big distinctions is that there was a problem, there still probably is a problem, with student loans,” said Joseph Antos, a senior fellow in health care and retirement policy at the right-leaning American Enterprise Institute. “Because the government guarantees loans and the loan processors. It's all part of a federal process, and so the federal government has some real responsibility there. In the case of medical debt, that's pure private sector.” 

According to Antos, even approaching the idea of wiping out medical debt is “mind boggling” in terms of the operational hurdles one would have to overcome. 

“There's certain operational difficulties,” Antos said. “Just the mechanical aspects of this [are] kind of mind boggling. And the age-old question is well, you know, what would be the fair amount of medical debt that you should have? Ending all medical debt would have to be defined, and in the end, there will always be some debt associated, for at least for a short period of time, where you are personally liable to pay something.” 

The White House referred questions about Biden's specific plans to his campaign, which did not immediately respond to a request for comment.

Antos theorized that a plan to address medical debt at the federal level could take the form of expanded subsidies, though he expressed doubts over any approach being plausible due to the immense complexity of the U.S. health payment system.

“I think as a practical matter, it would be very complicated, and it would end up alienating the voter base that Biden is really trying to appeal to,” said Antos. “And it would also lead to bad behavior. If you're going to have your medical debt covered, why should you buy insurance? Why not just accumulate medical debt?”