- What inspired you to file this legislation on medical debt?
I have listened to thousands of constituents since entering office in January and the number of central Ohioans adversely affected by medical debt is staggering. I have tried to make constituent services the hallmark of my office and an increasing number of the cases we deal with involve medical debt.
Medical debt is still leaving black marks on consumer credit scores even if that debt has been paid off or settled. That means that many of my constituents may be unfairly subjected to fines and higher interest rates when purchasing a home. In this economy, we need to help consumers, especially those that are put in a bad situation by something out of their control like health issues.
Medical debt is not the result of irresponsibly buying a big screen television or a fancy, luxury vacation. Debt incurred to make someone healthy and whole should not be considered when scoring consumer credit.
- Why is removing medical debts with zero balances from credit reports important for consumers?
Our broken health insurance system and escalating health care costs are major factors in the growing economic insecurity that Americans are facing. Today, uninsured and underinsured Americans are doubly harmed. They face high out of pocket costs if they experience illness or injury. Then, if they are unable to pay their medical bills promptly, their credit can be ruined by having these bills turned over to collection agencies and reported to credit bureaus. Such accounts lower one’s credit score. This can lead to increased interest charged on consumer debt, including home mortgages, automobile loans, and credit cards. I introduced H.R. 3421 to immediately address the injustice of medical accounts with a zero balance lingering on credit reports and causing credit problems for hardworking Americans.
- How common is the problem of medical debt?
The number of American adults under the age of 65 carrying medical debt jumped from 21 percent in 2005 to 28 percent in 2007 – this represents 49 million people. I found this to be a disturbing figure and was even more concerned when I learned that the majority of those with medical debt had insurance at the time of they sought the care for which they owe money.
- Is it typical for medical accounts to appear on people’s credit reports?
Many people, even some of my Congressional colleagues, are surprised to learn that medical bills or accounts are commonly found on credit reports. While it is rare for medical providers to report directly to the credit bureaus, it is all too common for the collection agencies, which providers contract with, to do so. Research published by the Federal Reserve Bank found that medical bills constitute the majority of non-credit related accounts in collection and found on credit reports.
- How common is it for medical bills to be sent to collection agencies?
According to research from The Commonwealth Fund, 28 million Americans were contacted by a collection agency for unpaid medical bills in 2007. This is the most recent data we have. Unfortunately, given the economic troubles that have confronted our nation over the past year, it is likely that the number of Americans dealing with calls from collection agencies for unpaid medical bills is increasing.
- Will this legislation be necessary if Congress passes a health reform law?
Yes. First, millions of Americans have medical debt and this existing debt will not disappear with the passage of health reform. People struggling to pay off their medical bills do so over the course of several years. H.R. 3421 will provide immediate relief. Second, the health reform proposals being introduced in both the House and Senate will be implemented over a number of years. In the interim, millions of Americans will be at risk of incurring medical debt. Therefore, this legislation will complement the health reform proposals before Congress.
- Isn’t it a good idea to leave medical accounts that have been paid in full on credit reports to show that someone has a good credit payment history?
No. Most medical accounts that appear on credit reports because unpaid bills have been sent to collection agencies. By definition, these are derogatory accounts. They are a blemish on a credit report. This is true whether these accounts have a balance of zero or thousands of dollars. This means that Americans who do the right thing and pay off their medical bills will find that it does little or nothing to improve their credit score. This is unfair, it is wrong, and H.R. 3421 will address this problem.
- Who will be helped by your legislation?
My bill is designed to help people who have medical bills on their credit reports with a balance of zero. I believe that if there is not a balance due on the account, it should be removed from the report so that it does the consumer no further harm.
Some individuals with medical bills on their credit reports are victims of a dysfunctional billing system. It can take months for insurers and providers to adjudicate claims. In the meantime, patients receive explanation of benefits forms with bold letters stating “this is not a bill, do not pay.” However, it is only after the insurers and providers come to an agreement on claims payment that a patient bill can be generated. Once invoiced, if the patient does not pay promptly, it can lead to collection action. After a bill is sent to collection and reported to the credit bureaus – even if paid off in full – it lowers the person’s credit score and drives up their cost of credit. H.R. 3421 will address this.
- What is your hope for outcome, should this legislation be passed into law?
That millions of hardworking Americans who have experienced health insurance billing problems or have inadequate insurance coverage are no longer penalized after they have used their hard earned dollars to pay off their medical bills.
Read more on Rep. Kilroy's website...
