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California bill banning medical debt from credit reports gets a boost

California Atty. Gen. Rob Bonta announced Monday that he is pushing for legislation that would ban medical debt from appearing on consumer credit reports. This is a Democratic-led effort to provide protections to patients who are under pressure from medical costs.

Bonta is a sponsor Sen. Monique Limon's bill, SB 1061 seeks to prevent health care providers and contracted collection agencies from sharing patients' medical debt with credit reporting agencies. It also prevents credit reporting agencies from accepting, storing, or sharing information about medical debt. Medical debt is not always an accurate reflection of credit risk, and having medical debt on your credit report can lower your credit score, making it difficult for people to find a job, rent an apartment, or secure a car loan. It may become difficult to do so.

“This is a broken part of our current system and it needs to be fixed,” Bonta, a Democrat, told KFF Health News. “This is an opportunity for California, and we are excited to take a stand on an important issue.”

If the bill becomes law, California would become the third state to remove medical bills from consumer credit reports. colorado and new york In 2023. minnesota There is a proposal to do the same.

The Biden administration last year announced plans to develop similar federal rules through the Consumer Financial Protection Bureau, but they have not yet been made public. And if former President Trump returns to the White House, he will have the privilege to rescind the rule.

Limon said it's important for states to legislate their own safeguards in parallel with the federal government's push. “We may have to wait a very long time to see what California could potentially achieve next year,” said Limon (D-Goleta).

Bonta said he doesn't know what kind of opposition he expects to face against the bill, but he doubts providers and collection agencies will push back.

a KFF Health News Analysis found that credit reporting threats are the most common collection tactic used by hospitals to get patients to pay their bills. For example, hospitals may worry that banning credit scores will make it more difficult to get patients to pay for the care they already receive.

The three major credit bureaus in the United States, Equifax, Experian, and TransUnion, have announced that they will stop including some medical debt on credit reports starting in 2022. Although the debts excluded include fully paid bills and debts of less than $500, credit institutions are voluntarily implementing this measure to eliminate millions of patients with large medical bills. It no longer appears on your credit report.

Limon said she often hears from constituents about the impact medical debt has on their lives.

The magazine says medical debt disproportionately affects low-income, Black and Latino Californians. California Healthcare Foundation.

And people who often have healthy incomes and health insurance are increasingly incurring medical debt.a KFF Health News-NPR Investigation Approximately 100 million people nationwide have medical debt, which has forced some to give up their homes, ration food and take on extra jobs, it found.

Although the legislation does not condone medical debt, Limon said he hopes the bill will encourage people to get health care when they need it.

“We're hearing a lot right now about a lot of people who are worried about getting health care because they can't afford it, and they're waiting for things to get worse,” Limon said. “If this bill passes, there will be less fear and more people will have access to health care.”

KFF Health News, Formerly known as Kaiser Health News, we are a national news station producing in-depth journalism about health issues.

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