Congress should keep medical debt reporting rule in place

Patricia Kelmar, J.D.

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Arizonans recuperating from health issues should not also have to suffer from lowered credit scores because of medical bills. Arizona’s Congressional delegation should keep the medical debt rule, vote no on any effort to block the rule and enable Arizonans to recover medically as well as financially.”

A non-controversial fact: medical bills are expensive and sometimes contain errors. To help address these issues, the Consumer Financial Protection Bureau recently issued a rule to prohibit credit reporting companies like Equifax, TransUnion and Experian from sharing medical debt information with lenders.

Individuals responsible still owe the outstanding medical bills but the rule prevents that debt from negatively impacting those consumers by saddling them with a lower credit score.

The CFPB’s Medical Debt Reporting Rule is expected to help 15 million people with unjustly lowered credit scores, lessening the negative impacts of medical debt and relieving pressure to pay wrongful bills. However, Congress is now considering rolling back that rule. Arizona’s Congressional delegation needs to protect us and keep the rule intact.

Three reasons the Medical Debt Reporting Rule needs to remain:

1. Medical billing errors and improper claim denials have been redefining the financial future of millions of families. These bills often turn up on credit reports as unpaid medical debt while individuals work to fix the errors or go through complicated insurance appeals. And any kind of debt, even debt that was mistakenly included on a credit report, can tank your credit score. Complaints from people about debt collection attempts on medical bills that were not owedincreased by 31% from 2018 to 2021. We’ve heard from people that they often consider paying medical debt they do not owe, just to protect their credit score. 

2. The rule recognizes that medical debt is often unavoidable — people get sick or are involved in a terrible accident. Suddenly they face large medical bills and simply can’t pay off the cost of their treatment within 90 days of receiving the medical bill. In the meantime, information on credit reports impacts a consumer’s credit score, which is not appropriate because the owed medical bills don’t reflect a person’s willingness to pay back loans. And with a bad credit score, consumers can be prevented from getting a credit card or a car loan.

3. According to the Commonwealth Fund, medical debt, or personal debt incurred from unpaid medical bills, is one of the leading causes of bankruptcy in the U.S. As many as 40% of U.S. adults, or about 100 million people, are currently in debt because of medical or dental bills. Medical debt can be subject to aggressive collections efforts by hospitals and debt collectors, and can even result in patients losing their homes or portions of their paychecks.

Arizonans recuperating from health issues should not also have to suffer from lowered credit scores because of medical bills. Arizona’s Congressional delegation should keep the medical debt rule, vote no on any effort to block the rule and enable Arizonans to recover medically as well as financially.

Editor’s note: Patricia Kelmar, J.D. is senior director of health care for the Arizona PIRG Education Fund. She recently served as the consumer representative on the federally appointed Ground Ambulance and Patient Billing Advisory Committee. Please send your comments to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.