SCOTT DETROW, HOST:
Few topics are more complex and often upsetting than the cost of health care in the United States. Well, reporter Dan Weissmann tackles the topic head-on in his podcast "An Arm And A Leg." One recent episode, which Dan reported in February, looks at how the Trump administration's huge sudden cuts to the government are playing out in the real world. That's because in recent years, the Consumer Financial Protection Bureau has taken major steps to help people drowning in medical debt, until this February when the administration essentially shut the agency down.
DAN WEISSMANN: Lara Ceccarelli works for American Financial Solutions. That's a nonprofit credit counseling agency. So Lara spends her days talking with people who have bills they can't pay, debt collectors chasing them, including for medical bills. For years, whenever Lara's talked to a client and it sounds like a debt collector is violating their rights, which happens a lot, she has referred the client to the CFPB, and it has worked.
LARA CECCARELLI: It makes a difference, feeling like you've got a powerhouse at your back.
WEISSMANN: But that Sunday night, February 9, news broke that an official President Donald Trump had put in charge of the CFPB was basically shutting the agency down, effective immediately. Agency staff had gotten a memo telling them to stop doing their jobs.
CECCARELLI: I felt my stomach sink through the floor.
WEISSMANN: I talked with Lara just over a week after that Sunday night, and we're going to hear how she managed that first week and how she started shifting what she tells clients, like, what other resources she's still referring them to. But first, we should talk about why the CFPB has been such a big deal, especially for people with medical debts.
CHI CHI WU: My name is Chi Chi Wu. I'm a senior attorney at the National Consumer Law Center.
WEISSMANN: Chi Chi Wu says, it didn't take long for medical debts to land in the agency's crosshairs.
WU: In 2014, the Consumer Financial Protection Bureau did a study that found, if you look at the debt collection items on credit reports...
WEISSMANN: In other words, if you ask, when people get put in collections, what are the bills actually for?
WU: Over half of them are for medical debt. Half - it was a huge number.
WEISSMANN: Which added up to a ton of people having lousy credit scores not because they'd taken a cruise they couldn't pay for, but because they'd gotten sick.
WU: It was a huge problem. People would try to be buying a house or a car, trying to get a credit card, and they'd have to pay more or even get turned down.
WEISSMANN: And now that huge problem was on the record, thanks to the CFPB. So the next year, a bunch of state attorneys general reached a voluntary agreement with the big three credit bureaus - Equifax, Experian, TransUnion. The big three agreed that now they'd wait 180 days - six months - before putting a medical debt on somebody's credit report.
WU: So the idea was the consumer would have six months to straighten out insurance, figure out what they actually owed, maybe dispute it if they didn't think they owed it.
WEISSMANN: In 2020, the CFPB issued a new rule. It stopped a practice called parking that bill collectors had been using, especially for small medical debts.
WU: They wouldn't send a single letter. They wouldn't make a single phone call. All they would do is report that debt to the credit bureaus and wait - would just wait until the consumer had to use their credit score for something, you know, refinance their mortgage, buy a car, get a new credit card.
WEISSMANN: Rent an apartment, apply for a job.
WU: All of those - and then their credit would get pulled. This medical debt would show up, and they'd be left scrambling because they would have to clear that debt from their credit report before they could get that mortgage or car loan or job or apartment.
WEISSMANN: So people paid up. They didn't have a choice.
WU: And the reason debt collectors do that is 'cause it's cheap. It's cheap to do credit reporting. It's expensive to send a letter.
WEISSMANN: Chi Chi Wu says the CFPB started working on a rule banning parking during the second Obama administration and finalized the rule in 2020 under Donald Trump. It takes a while.
When Joe Biden became president, he appointed a CFPB director who put extra focus on medical debts. The credit bureaus got the idea they might be subject to some new rules on the topic and volunteered to make some changes of their own. In May 2022, they announced, instead of waiting just six months to put medical bills on credit reports, they were going to wait a full year.
WU: And then they agreed not to report medical debts under $500.
WEISSMANN: When I talked with Lara Ceccarelli, she told me she could see the CFPB's impact in her day-to-day work.
CECCARELLI: I used to have at least one conversation about medical debt a day, usually more, and that's not the case. You know, I'm having a couple of conversations per week maybe about medical debt, so we've seen the impact.
WEISSMANN: And she could see more on the horizon. In January, before the inauguration, the CFPB actually issued new rules about medical debt. Under the new rules, all medical debts would come off of credit reports, and lenders could not look at medical debts when making lending decisions. So the CFPB had planned to start enforcing those rules in March.
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WEISSMANN: Now the whole agency was shutting down. Lara says she's had to revise what she's used to telling clients.
CECCARELLI: You say, you know, the CFPB is incredibly solid. They will support you. And I can't say that anymore.
WEISSMANN: So she's telling people, hey, it's worth calling the CFPB just in case somebody picks up. But meanwhile, here's some other places to call.
CECCARELLI: I had a client who has been threatened by a debt collector, and that debt that they're collecting on is actually outside of the statute of limitations. It's not collectible anymore. But they're being harassed, basically, calling them at all hours of the day and night and advising them that - you know, that they're still subject to legal action, none of which is true.
WEISSMANN: Which means, Lara tells me, that collector is breaking a law, a law called the Fair Debt Collection Practices Act.
CECCARELLI: And normally, I would have sent that client in the direction of the CFPB.
WEISSMANN: Normally, you file a complaint with the CFPB - the company responds to you within 15 days, according to the agency's website. Lara says, companies pay attention because the CFPB has a big stick. In 2023, the agency shut down one medical debt collection company for violating this very law. That version of normal is gone for now.
But Lara happens to know the Federal Trade Commission, which is still up and running, also has authority to enforce that law. Other folks, she's referring to their state attorney general's office, and some states have independent consumer protection bureaus. And Lara and her colleagues respect the work they do, but it's not the same as having a powerful national agency that enforces federal law.
CECCARELLI: All these other different places can sort of take up a piece of the enforcement action, but none of them have that same robust power.
WEISSMANN: Lara and her colleagues are still there. She says their funding comes from private organizations, not the feds.
CECCARELLI: We're not worried about the lights going out here yet. We have to, you know, maintain some degree of equilibrium when you're speaking to clients that - you know, one of you can have a breakdown at a time, right? And it's never our turn. So...
WEISSMANN: (Laughter).
CECCARELLI: ...You know, you have to maintain some degree of optimism and positivity because if you're not optimistic and positive for their outcomes, how can they possibly think there's hope for the future? And there still is.
DETROW: Dan Weissmann hosts the podcast "An Arm And A Leg," produced in partnership with KFF Health 瓜神app and member station KUOW. Since Dan's reporting in February, court orders have curbed some of the administration's actions, but things continue to evolve at the CFPB. We also reached out to the agency for comment on where consumers should go to report violations of consumer protection laws and haven't heard back. Transcript provided by NPR, Copyright NPR.
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