August 16, 2018

Senator Hassan Joins in Introducing Legislation to Help Granite Staters and Americans Hurt by Medical Debt

WASHINGTON – As part of her efforts to help hard-working Granite Staters get ahead and stay ahead, Senator Maggie Hassan today joined her colleagues in introducing the Medical Debt Relief Act. The legislation would prevent medical debt from continuing to damage consumers’ credit scores after it has been paid off or settled, ensuring that otherwise-creditworthy consumers are able to find affordable credit to buy a home or a car or take out a loan.

Medical debt is unlike other types of debt. As opposed to credit card debt or loans that consumers take on willingly, medical debt is often the result of unexpected accident or illness that is outside the consumer’s control. Additionally, due to complex medical billing systems and the potential for misunderstandings with health insurance companies, medical bills are often sent to collections before it is clear whether it is the consumer or the insurer who owes money to the health care provider.

“Americans who become sick or get injured should not have to worry about how this unforeseen hardship will damage their credit scores and potentially impact their ability to buy a house or take out a loan,” Senator Hassan said. “This commonsense legislation will help ease the burden for consumers whose medical debt has crippled their ability to invest, purchase consumer goods, and contribute to our economy. I will keep fighting to lower health care costs and to ensure that all hard-working Granite Staters and Americans have the support they need to get ahead and stay ahead.”

The Consumer Financial Protection Bureau has found that 43 million American consumers have overdue medical debt on their credit reports, and that 15 million have only medical debt on their credit reports. Many consumers mistakenly believe that unpaid medical bills have no influence over one’s credit score. However, once a debt is assigned to collections, even if the cause was an inefficient health care billing system, the account will be considered a derogatory account by credit scoring algorithms.  

Due to the atypical nature of medical debt, the predictive value of medical accounts on credit reports is low. Credit reporting companies have testified before Congress that removing medical debt from consideration would not harm the predictive value of consumer credit reports.

The Medical Debt Relief Act would help ensure that medical debt that is paid off or settled by a consumer is promptly removed from a credit report rather than haunting their credit score for years after. 

The full text of the bill can be found here.