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Harris wants to forgive medical debt for millions of Americans

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Vice President Kamala Harris addresses the Democratic National Convention at the United Center in Chicago on Aug. 19, 2024.

Tom Williams | CQ-Roll Call, Inc. | Getty Images

Vice President Kamala Harris wants to forgive medical debt for millions of Americans.

The economic plan Harris rolled out last week notes that the Democratic presidential nominee and her running mate, Minnesota Gov. Tim Walz, would work with states to relieve people of their medical debt and “to help them avoid accumulating such debt in the future, because no one should go bankrupt just because they had the misfortune of becoming sick or hurt.”

Some 15 million Americans have medical bills on their credit reports, according to Consumer Financial Protection Bureau research published in April. People in the U.S. owe at least $220 billion in medical debt, a February KFF analysis found.

“Medical debt affects an enormous number of people, so it’s an issue that resonates with voters,” said Larry Levitt, executive vice president for health policy at KFF.

How medical debt became normal in the U.S.

Indeed, 51% of adults say it is extremely or very important for the federal government to forgive medical debt, compared with 39% who said the same about student loan debt, according to a May poll conducted by the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research. The groups surveyed 1,309 adults.

“Vice President Harris may see student loan forgiveness and medical debt forgiveness as both addressing inequities that prevent people from achieving the American dream,” said higher education expert Mark Kantrowitz.

The Harris campaign did not respond to a request for comment.

Former President Donald Trump hasn’t come out with a medical debt cancellation proposal, but as president he pushed for more price transparency for patients and to curb surprise medical bills.

The Trump administration also tried but failed to repeal the Affordable Care Act. Overturning even portions of that law would lead to more Americans becoming uninsured and higher premium costs for policyholders, according to an estimate by the Congressional Budget office.

Harris differentiates herself with focus on medical debt

By coming out with a medical debt forgiveness plan, Harris may be looking to differentiate herself from President Joe Biden and his student debt efforts, said Braxton Brewington, press secretary for the Debt Collective, an organization that advocates for debt cancellation.

Biden has forgiven more student debt than any other president.

“She has the freedom to move into another space,” Brewington said, adding that Harris would likely continue Biden’s work on student debt, as well.

“I’m sure she’ll do both,” he said.

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The American health-care system has long been on Harris’ radar.

As a presidential candidate in 2020, Harris pushed for a version of Medicare For All, a plan she no longer backs as she shifts to the center of her party. But Harris continued to show a concern with health-care costs as vice president, leading a White House effort in June to clear medical bills from Americans’ credit reports.

This focus may come, in part, from her own experience.

In a 2019 interview with late activist Ady Barkan, Harris described the day her mother informed her she had cancer.

“My mother, she said to my sister and me, ‘I want to meet you guys for lunch,’ and she showed up at the restaurant wearing makeup — my mother never wore makeup, and her hair was blow dried,” Harris said, tearing up. “She took our hands, and she’d said she’d been diagnosed with colon cancer.

“That was one of the worst days of my life, truly.”

That families experiencing this “would also have to worry about how to pay the bills,” Harris told Barkan was “just inhumane.”

Harris’s mother, who was a cancer researcher, died in 2009 at 70.

How medical debt could be canceled

Harris’ economic plan didn’t include specific details on how the medical debt jubilee would happen, but experts say an investment by the government would go far.

“Amazingly, medical debt can be bought from collection agencies for a penny on the dollar, a reflection of the fact that so few people can afford to pay their overdue medical bills,” KFF’s Levitt said.

Allison Sesso, president and chief executive officer of Undue Medical Debt, a nonprofit that partners with local governments to cancel people’s medical debts, said the group can usually wipe out around $1,000 of the debt for every $10. It often buys the debt directly from hospitals, Sesso said.

States, counties and cities across the U.S. are already using funds from the American Rescue Plan passed during the Covid pandemic to purchase and eliminate around $7 billion in medical debt for roughly 3 million Americans by the end of 2026. As many as 1 million residents in Arizona could benefit, for example, and 400,000 people in New Jersey, according to the White House.

Medical debt affects an enormous number of people, so it’s an issue that resonates with voters.

Larry Levitt

executive vice president for health policy at the Kaiser Family Foundation

Recent research has raised some doubts about the benefits of forgiving medical debt. The relief has no impact on people’s mental health, credit access or financial distress, according to a National Bureau of Economic Research study published in April.

Experts say this may be due in part to the fact that, beginning last year, the major credit reporting companies cleared most medical collections under $500 from people’s records. Those past-due bills are now less likely to affect people’s credit. Harris is now trying to get even more, if not all, medical debts off people’s credit reports.

However, Sesso said Undue Medical Debt hears from people all the time about how canceling their medical debt improved their lives. In extreme cases, unpaid medical bills can lead to wage garnishments and seized assets, she said.

Frequently, people who still owe a hospital or doctor a bill will avoid necessary treatments, she said.

“People don’t go back to the doctor because they feel they’ll be asked for the bill,” Sesso said. “And then the problem gets worse, and the interventions much more expensive.”

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Trump administration loses appeal of DOGE Social Security restraining order

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A person holds a sign during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025. 

Nathan Layne | Reuters

The Trump administration’s appeal of a temporary restraining order blocking the so-called Department of Government Efficiency from accessing sensitive personal Social Security Administration data has been dismissed.

The U.S. Court of Appeals for the 4th Circuit on Tuesday dismissed the government’s appeal for lack of jurisdiction. The case will proceed in the district court. A motion for a preliminary injunction will be filed later this week, according to national legal organization Democracy Forward.

The temporary restraining order was issued on March 20 by federal Judge Ellen Lipton Hollander and blocks DOGE and related agents and employees from accessing agency systems that contain personally identifiable information.

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That includes information such as Social Security numbers, medical provider information and treatment records, employer and employee payment records, employee earnings, addresses, bank records, and tax information.

DOGE team members were also ordered to delete all nonanonymized personally identifiable information in their possession.

The plaintiffs include unions and retiree advocacy groups, namely the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans and the American Federation of Teachers. 

“We are pleased the 4th Circuit agreed to let this important case continue in district court,” Richard Fiesta, executive director of the Alliance for Retired Americans, said in a written statement. “Every American retiree must be able to trust that the Social Security Administration will protect their most sensitive and personal data from unwarranted disclosure.”

The Trump administration’s appeal ignored standard legal procedure, according to Democracy Forward. The administration’s efforts to halt the enforcement of the temporary restraining order have also been denied.

“The president will continue to seek all legal remedies available to ensure the will of the American people is executed,” Liz Huston, a White House spokesperson, said via email.

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The Social Security Administration did not respond to a request from CNBC for comment.

Immediately after the March 20 temporary restraining order was put in place, Social Security Administration Acting Commissioner Lee Dudek said in press interviews that he may have to shut down the agency since it “applies to almost all SSA employees.”

Dudek was admonished by Hollander, who called that assertion “inaccurate” and said the court order “expressly applies only to SSA employees working on the DOGE agenda.”

Dudek then said that the “clarifying guidance” issued by the court meant he would not shut down the agency. “SSA employees and their work will continue under the [temporary restraining order],” Dudek said in a March 21 statement.

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Most credit card users carry debt, pay over 20% interest: Fed report

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Julpo | E+ | Getty Images

Many Americans are paying a hefty price for their credit card debt.

As a primary source of unsecured borrowing, 60% of credit cardholders carry debt from month to month, according to a new report by the Federal Reserve Bank of New York.

At the same time, credit card interest rates are “very high,” averaging 23% annually in 2023, the New York Fed found, also making credit cards one of the most expensive ways to borrow money.

“With the vast majority of the American public using credit cards for their purchases, the interest rate that is attached to these products is significant,” said Erica Sandberg, consumer finance expert at CardRates.com. “The more a debt costs, the more stress this puts on an already tight budget.”

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Most credit cards have a variable rate, which means there’s a direct connection to the Federal Reserve’s benchmark. And yet, credit card lenders set annual percentage rates well above the central bank’s key borrowing rate, currently targeted in a range between 4.25% to 4.5%, where it has been since December.

Following the Federal Reserve’s rate hike in 2022 and 2023, the average credit card rate rose from 16.34% to more than 20% today — a significant increase fueled by the Fed’s actions to combat inflation.

“Card issuers have determined what the market will bear and are comfortable within this range of interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

APRs will come down as the central bank reduces rates, but they will still only ease off extremely high levels. With just a few potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Schulz.

Credit card debt?

Despite the steep cost, consumers often turn to credit cards, in part because they are more accessible than other types of loans, Schulz said. 

In fact, credit cards are the No. 1 source of unsecured borrowing and Americans’ credit card tab continues to creep higher. In the last year, credit card debt rose to a record $1.21 trillion.

Because credit card lending is unsecured, it is also banks’ riskiest type of lending.

“Lenders adjust interest rates for two primary reasons: cost and risk,” CardRates’ Sandberg said.

The Federal Reserve Bank of New York’s research shows that credit card charge-offs averaged 3.96% of total balances between 2010 and 2023. That compares to only 0.46% and 0.43% for business loans and residential mortgages, respectively.

As a result, roughly 53% of banks’ annual default losses were due to credit card lending, according to the NY Fed research.

“When you offer a product to everyone you are assuming an awful lot of risk,” Schulz said.

Further, “when times get tough they get tough for most everybody,” he added. “That makes it much more challenging for card issuers.”

The best way to pay off debt

The best move for those struggling to pay down revolving credit card debt is to consolidate with a 0% balance transfer card, experts suggest.

“There is enormous competition in the credit card market,” Sandberg said. Because lenders are constantly trying to capture new cardholders, those 0% balance transfer credit card offers are still widely available.

Cards offering 12, 15 or even 24 months with no interest on transferred balances “are basically the best tool in your toolbelt when it comes to knocking down credit card debt,” Schulz said. “Not accruing interest for two years on a balance is pretty hard to argue with.”

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The 60/40 portfolio may no longer represent ‘true diversification’: Fink

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Andrew Ross Sorkin speaks with BlackRock CEO Larry Fink during the New York Times DealBook Summit in the Appel Room at the Jazz at Lincoln Center in New York City on Nov. 30, 2022.

Michael M. Santiago | Getty Images

It may be time to rethink the traditional 60/40 investment portfolio, according to BlackRock CEO Larry Fink.

In a new letter to investors, Fink writes the traditional allocation comprised of 60% stocks and 40% bonds that dates back to the 1950s “may no longer fully represent true diversification.”

“The future standard portfolio may look more like 50/30/20 — stocks, bonds and private assets like real estate, infrastructure and private credit.” Fink writes.

Most professional investors love to talk their book, and Fink is no exception. BlackRock has pursued several recent acquisitions — Global Infrastructure Partners, Preqin and HPS Investment Partners — with the goal of helping to increase investors’ access to private markets.

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The effort to make it easier to incorporate both public and private investments in a portfolio is analogous to index versus active investments in 2009, Fink said.

Those investment strategies that were then considered separately can now be blended easily at a low cost.

Fink hopes the same will eventually be said for public and private markets.

Yet shopping for private investments now can feel “a bit like buying a house in an unfamiliar neighborhood before Zillow existed, where finding accurate prices was difficult or impossible,” Fink writes.

60/40 portfolio still a ‘great starting point’

After both stocks and bonds saw declines in 2022, some analysts declared the 60/40 portfolio strategy dead. In 2024, however, such a balanced portfolio would have provided a return of about 14%.

“If you want to keep things very simple, the 60/40 portfolio or a target date fund is a great starting point,” said Amy Arnott, portfolio strategist at Morningstar.

If you’re willing to add more complexity, you could consider smaller positions in other asset classes like commodities, private equity or private debt, she said.

However, a 20% allocation in private assets is on the aggressive side, Arnott said.

The total value of private assets globally is about $14.3 trillion, while the public markets are worth about $247 trillion, she said.

For investors who want to keep their asset allocations in line with the market value of various asset classes, that would imply a weighting of about 6% instead of 20%, Arnott said.

Yet a 50/30/20 portfolio is a lot closer to how institutional investors have been allocating their portfolios for years, said Michael Rosen, chief investment officer at Angeles Investments.

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The 60/40 portfolio, which Rosen previously said reached its “expiration date,” hasn’t been used by his firm’s endowment and foundation clients for decades.

There’s a key reason why. Institutional investors need to guarantee a specific return, also while paying for expenses and beating inflation, Rosen said.

While a 50/30/20 allocation may help deliver “truly outsized returns” to the mass retail market, there’s also a “lot of baggage” that comes with that strategy, Rosen said.

There’s a lack of liquidity, which means those holdings aren’t as easily converted to cash, Rosen said.

What’s more, there’s generally a lack of transparency and significantly higher fees, he said.

Prospective investors should be prepared to commit for 10 years to private investments, Arnott said.

And they also need to be aware that measurement issues with asset classes like private equity means past performance data may not be as reliable, she said.

For the average person, the most likely path toward tapping into private equity will be part of a 401(k) plan, Arnott said. So far, not a lot of companies have added private equity to their 401(k) offerings, but that could change, she said.

“We will probably see more plan sponsors adding private equity options to their lineups going forward,” Arnott said.

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