It's Back! Oregon Senator Reintroduces 'Medical Debt Responsibility Act'

Last year when the Medical Debt Responsibility Act died in committee, you had to know Congress was going to bring it back. Yesterday a group of senators did.

Senators Dick Durbin (D-Ill.), Chuck Schumer (D-N.Y.), Tom Harkin (D-Iowa), Sherrod Brown (D-Ohio), Robert Menendez (D-N.J.), Jeff Merkley (D-Ore.) and Richard Blumenthal (D-Conn.) reintroduced the bill.

If passed, the bill would require credit bureaus to delete reports of any delinquent medical debt not exceeding $2,500 within 45 days after it is resolved. This is the third time the bill has been introduced, and each time it has progressed further through Congress. Last year it received a hearing by the House Committee on Financial Institutions and Consumer Credit, but never made it out of committee to a vote on the floor.

“Oregonians shouldn’t have to pay more on their mortgage or their credit card simply because they had the bad luck to need medical care,” said Oregon Sen. Merkley, the primary sponsor of the bill. “Unforeseen accident or illness can happen to any one of us. We can’t change that fact, but we can change the law so that responsible working families aren’t hit with unfair credit reports for years after medical debt has been paid off.”

According to a press release from the bill’s sponsors:

Medical bills differ in a number of ways from other bills. The bills are often submitted first to insurance, and it can take considerable time to determine the accurate amount actually owed by the consumer. Consumers must navigate a complex and confusing billing system and wait for decisions from one or more insurance companies to find out how much they owe. For this reason, consumers often do not learn that they are delinquent on a medical bill until they hear from a collection agency, by which time their credit score has already suffered.

In addition, medical debt is atypical because consumers have little choice over whether to incur medical expenses or how much debt they accrue. Due to this unique nature of medical debt, its predictive value on credit reports is low.

The Medical Debt Responsibility Act fixes this problem by prohibiting consumer credit agencies from using paid off or settled medical debt collections in assessing a consumer’s credit worthiness. In addition, the bill will require the creditor or credit rating agency to expunge the medical debt from the consumer’s record within 45 days from the day it is paid off or settled.

The Medical Debt Responsibility Act was endorsed last Congress by the American Medical Association, Consumers Union, Mortgage Bankers of America, NAACP, and the National Home Builders Association.