January 6, 2023 — Report

UPDATE – May 2024

Since this report was published in January 2023, five states have passed legislation prohibiting credit reporting of medical debts – Connecticut, Colorado, Minnesota, New York, and Virginia. Other states are considering similar legislation. For more information about these developments, contact Michael Best ([email protected]).

The National Consumer Law Center (NCLC) issued a 2019 report, Don’t Add Insult to Injury: Medical Debt & Credit Reports, detailing the severe burden medical debt places on consumers, particularly the consequences of the presence of medical debt on consumer credit reports. Over three years later, there have been many developments on the national and state level to help consumers facing overwhelming medical debt.

On the national level, Experian, Equifax, and TransUnion announced that they would not report medical debt for one year; will remove paid-off medical debt; and will not include unpaid medical debt of less than $500 on a consumer’s credit report. On the state level, policies include those of five states that enacted laws restricting the reporting of medical debt for uninsured or underinsured patients, or patients who have a dispute with their insurance company, and four states that enacted restrictions on reporting medical debt when the consumer should have been reviewed for and provided discounted care.

While such national and state restrictions on the reporting of medical debt are a good start, much more needs to be done to address the core issue: the accumulation of crippling medical debt on consumers. With roughly 26 million people in the United States who do not have health insurance, and many more who do not have sufficient health insurance to cover medical expenses, the burden of medical debt is an albatross around consumers’ necks. The problem is compounded by the negative impact of unpaid medical debts on credit reports, which limits access to jobs, transportation, housing, and credit, impairing the consumer’s ability to fully repay the debt. Medical debt needs to be reduced and reporting needs to stop.

This update describes recent policy developments and proposed solutions that have come from state attorneys general, the Big Three credit bureaus, federal agencies, credit score developers, and federal and state legislators, and highlights recommendations for addressing the overwhelming burden on consumers that medical debt causes.