Lawmakers have unanimously agreed to prevent medical debt from being factored into Mainers’ credit scores.
Although State Law currently has some restrictions on the treatment of medical debt, LD 558 completely blocks it from being included on credit reports.
Under this bill, “a medical creditor, debt collector or debt buyer may not report a consumer’s medical debt to a consumer reporting agency.”
According to bill sponsor Sen. Donna Bailey (D-York), 40 percent of Mainers have medical debt. She then goes on to explain how medical credit cards “can trap patients in
debt,” as they charge high interest rates — which according to the American Association of Retired Persons (AARP) exceed 25 percent APR — and “skirt consumer protection laws.”
“More than half of Mainers with medical debt report their credit score has been negatively affected by medical debt, and, as we know, a lower credit score can negatively impact someone’s ability to rent or otherwise obtain housing,” Sen. Bailey said. “The majority have indicated that their ability to obtain employment or loans has been negatively impacted by their debt.”
“As health care costs continue to rise faster than inflation and more Mainers struggle to meet their basic needs,” she argued. “We need to do what we can to protect Mainers who struggle to afford the health care they need and address medical debt.”
Testimony supporting this proposal was submitted by numerous advocacy groups, including those representing patients, as well as the elderly and those who are low-income.
“The involuntary nature of much of their medical treatments makes managing these debts difficult. The medical services that give rise to the debts are usually sudden, unexpected and unplanned,” wrote Pine Tree Legal Assistance. “LD 558 would allow Maine consumers time to get back on their feet without the specter of credit issues to hold them back.”
“Similarly, a shock medical bill serves as a poor indicator of a person’s creditworthiness and shouldn’t be used by credit reporting agencies to exacerbate a consumer’s downward financial spiral,” they added.
“Sometimes medical debt is incurred due to unexpected catastrophic healthcare needs; however, many older adults nationally are carrying debt due to their routine health care services,” explained AARP Maine. “A Kaiser Family Foundation poll found that among Medicare-age adults with medical debt some of that debt was caused by routine care such as diagnostic tests and lab costs, and doctor office visits.”
“The same Kaiser Family Foundation survey found that among adults 65+ who are carrying medical debt, over half of them have delayed or forgone medical treatment or prescription drugs due to the cost,” AARP said. “This is dangerous and can exasperate existing health problems.”
“Further, medical debt on credit reports can lower credit scores and impair people’s ability to obtain loans, employment, housing, and insurance,” the group added.
The Consumer Data Industry Association (CDIA), on the other hand, raised concerns that “state legislation that attempts to regulate credit reporting can unleash many unintended consequences because the credit reporting system operates across all jurisdictions.”
“Only national, uniform standards can achieve the dual goals of protecting consumers and maintaining accurate credit reports, which is why CDIA must oppose proposals like LD 558,” they explained.
“While concerns regarding medical debt and the impact of unpaid debts on consumer’s credit histories are understandable, proposals like LD 558 that attempt to exclude some medical debts from the consumer reporting system do not address the underlying concerns about the costs of medical care,” CDIA concluded.
Members of the Health Coverage, Insurance and Financial Services Committee went on to unanimously vote in support of an amended version of this bill that included some additional definitions and clarifications.
Lawmakers in the House and Senate then accepted their recommendation without taking a roll call vote in either chamber.
LD 558 has now been sent to Gov. Janet Mills’ (D) desk for a signature.
A similar bill was introduced during the previous legislative session but was amended before final adoption, converting it into a ban on the imposition of fees or interest on medical debt.
It also barred debt collectors from pursuing litigation to compel the payment of medical debt if the consumer’s household income is less than 300 percent of the federal poverty line.
After being approved without a roll call vote in both chambers, Gov. Mills signed the bill into law on April 22, 2024.
