Merkley Reintroduces Bill to Provide Relief to Americans Struggling with Medical Debt

Washington, D.C. –Oregon’s Senator Jeff Merkley reintroduced legislation yesterday that will prohibit companies from using paid off or settled medical debt in assessing consumer credit scores.  The Medical Debt Responsibility Act will assist approximately 72 million Americans affected by medical bill problems and medical debt.

“Medical debt is not a great predictor of a person’s credit-worthiness, and folks should not be shackled from getting loans to start businesses or buy their dream home because they got very sick,” Merkley said. “We can’t see the future to plan ahead for medical emergencies, but we can stop them from damaging our working families’ credit scores for years in the future.”

“Unresolved medical debt bills, including bills stuck in insurance red tape that have not even been received by the consumer, are often provided to credit reporting agencies and can negatively impact consumers’ credit scores for years,” said Senator Dick Durbin (D-IL). “Even once the debts are paid in full, credit ratings can still be affected. After a sudden illness or medical emergency and the skyrocketing cost of critical treatment, the last thing families should have to deal with is a plummeting credit score. Our legislation will help put a stop to this unfair practice.”

Currently, even medical debt collections that have been completely paid off or settled can still significantly damage a consumer’s credit score for years.  As a result, consumers can be denied credit or pay higher interest rates when buying a home or obtaining a credit card.  Because many medical bills are submitted first to insurance companies, consumers often do not learn that they are responsible for a medical bill until they hear from a collection agency, by which time their credit score has already suffered.

The Medical Debt Responsibility Act will fix this inequity 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.

Along with Durbin, the bill is cosponsored by Senators Sherrod Brown (D-OH), Chuck Schumer (D-NY), Tom Harkin (D-IA), and Bob Menendez (D-NJ) and endorsed by the Consumers Union.