Waters Introduces Legislation to Prevent Medical Debt from Unfairly Wrecking Consumers’ Credit
Congresswoman Maxine Waters, Ranking Member of the House Financial Services Committee, today took steps to comprehensively address the impact that medical debt has on consumers by introducing legislation which would require consumer reporting agencies to remove any information related to fully paid or settled medical debt from a consumer’s credit report within 45 days. At the same time she joined two other senior Democratic members in requesting the Government Accounting Office (GAO) review whether medical financing options available to consumers are sufficiently fair and transparent.
Representatives Watt, Meeks, Clay, Lynch, Ellison, Himes, Peters, Foster, and Markey are original cosponsors of the legislation. The legislation is the House companion to S.160, which was introduced by Senator Jeff Merkley.
The Medical Debt Responsibility Act of 2013 (H.R. 1767) would help improve consumers’ access to credit by removing fully settled or paid medical debt information from a credit report within 45 days. Under current law this type of information is generally retained on a credit report for seven years. The legislation recognizes that medical debt is unique and, therefore, does not impose an arbitrary dollar cap on the amount of medical debt that can be removed from a credit report. According to a study by the Commonwealth Fund, medical bill problems or accrued medical debt affects roughly 73 million working-age adults in this country.
“Illness or injury may strike any of us at any time, and often results in expensive treatment leaving millions of Americans to wrestle with medical debt,” said Waters in introducing the legislation. “People can choose when to shop and buy certain commercial goods but they cannot plan when they are going to be sick and need to seek medical care. If a consumer fully pays or settles a medical debt, the consumer should not continue to be arbitrarily penalized. The solution to this problem is simple and fair; information about a medical debt should be removed from a credit report once it is fully settled or paid. This information should not linger on a consumer’s credit report, like an albatross around their neck, making it more difficult for them to obtain credit for years to come.”
The Waters’ bill is substantially similar to legislation -- The Medical Debt Relief Act of 2010 (H.R. 3421) -- which was introduced by former Representative Mary Jo Kilroy during the 111th Congress. H.R. 3421 passed the House of Representatives under suspension by a recorded vote of 336 to 82 on September 20, 2010.
To fully address the consequences of medical debt, Ranking Member Waters and Ranking Member Elijah E. Cummings of the Committee on Oversight and Government Reform, today joined a letter sent by Representative Edward Markey to the GAO requesting a thorough review of the marketplace for third-party consumer financial products and services – such as medical credit cards – that are targeted to consumers seeking to pay for medical expenses. GAO’s review will help shed light on whether additional action needs to be taken to protect the most vulnerable consumers, including those who are in pain, seriously ill, underinsured, uninsured, or elderly.
“We are concerned that rather than alleviating the pressure of medical bills, some of the products available in the current market may drive consumers further into debt,” states the joint letter. Representatives Waters, Markey and Cummings also ask GAO to consider the legal and regulatory framework currently governing third-party consumer financial products and services targeted at covering medical costs, and what changes to this framework may be beneficial in ensuring that the terms and conditions for these types of credit products are fair, transparent and understood by vulnerable consumers looking to cover medical expenses.