California Atty. Gen. Rob Bonta announced Monday that he is throwing his weight behind legislation to prevent medical debt from showing up on consumer credit reports, a Democratic-led effort to provide protections for patients suffering from the stress of health care bills.
Bonta is the sponsor of Sen. Monique Lemon's bill, SB 1061, which seeks to prevent health care providers, as well as any contracted collection agency, from sharing a patient's medical debt with credit reporting agencies. It would also prevent credit reporting agencies from accepting, storing or sharing any information related to medical debt. Medical debt is not necessarily an accurate reflection of credit risk, and its inclusion on credit reports can lower credit scores and make it harder for people to get a job, rent an apartment, or get a car loan.
“This is a broken part of our current system that needs to be fixed,” Bonta, a Democrat, told KFF Health News. “This is California’s opportunity, and we enjoy being able to stand up on key issues.”
If passed, California would become the third state to remove medical bills from consumer credit reports, after Colorado and New York in 2023. Minnesota has a proposal to do the same.
Last year, the Biden administration announced plans to develop similar federal rules through the Consumer Financial Protection Bureau, but they have not yet been published. If former President Trump returns to the White House, he will have the right to undo the rules.
Lemon said it's important for the state to enshrine its own protections into law alongside the federal push. “We may be waiting a very long time to see what results California can achieve next year,” said Lemon (D-Goleta).
Bonta said he's not sure what kind of opposition to expect for the bill, but he wonders whether service providers and collection agencies will resist it.
An analysis by KFF Health News found that credit reporting threats are the most common collection tactic used by hospitals to get patients to pay their bills. A hospital, for example, might worry that a credit score ban might make it more difficult to convince patients to pay for medical care they've already received.
The three largest U.S. credit agencies — Equifax, Experian, and TransUnion — said they will stop including certain medical debts on credit reports starting in 2022. Among the debts excluded are paid bills and those of less than $500, but the agencies' voluntary actions have led to the exclusion. Millions of patients with larger medical bills on their credit reports.
Lemon said she often hears from voters about the effects medical debt has on their lives.
Medical debt disproportionately affects low-income, Black and Latino Californians, according to the California Health Care Foundation.
Increasingly, people with healthy incomes who often carry medical insurance are incurring medical debt. An investigation by KFF Health News-NPR found that about 100 million people across the country are saddled with medical debt, forcing some to give up their homes and food rations and take on extra work.
Although the legislation would not forgive medical debt, Lemon said she hopes it will encourage people to seek medical care when they need it.
“You're hearing a lot of people now who are anxious about getting medical care because they can't afford it and are instead waiting for their condition to get worse,” Lemon said. “If the bill passes, we will see less fear and more people will get medical care.”
KFF Health News, formerly known as Kaiser Health News, is a national newsroom that produces in-depth journalism on health issues.
