Among the hundreds of laws now going into effect in the state is a unanimous measure preventing medical debt from being included on Mainers’ credit reports.
In June of this year, lawmakers from both sides of the aisle agreed to pass a bill preventing unpaid medical bills from affecting Mainers’ credit scores.
Although State Law currently has some restrictions on the treatment of medical debt, this new law blocks it from being included at all.
Under this legislation, “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 has also explained that 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.”
When this law was first introduced, supportive testimony was offered by a number of advocacy organizations, including those representing patients, as well as the elderly and those who are low-income.
It was pointed out by some advocates that unpaid medical bills serve as poor indicator of a person’s financial responsibility, as they are typically incurred involuntarily and unexpectedly.
“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.
Despite concerns from the Consumer Data Industry Association (CDIA) that state-level regulation of credit reporting “can unleash many unintended consequences because the credit reporting system operates across all jurisdictions,” lawmakers unanimously approved an amended version of the bill.
This measure went on to be approved by both the House and Senate without roll call votes before being signed into law by Gov. Janet Mills (D) on June 9 of this year.
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.
