California Attorney General Rob Bonta has sponsored legislation aimed at keeping medical debt off consumer credit reports, he announced March 11.
Senate Bill 1061, authored by Sen. Monique Limón (D-Santa Barbara), would protect consumers from having their credit ruined by prohibiting health care providers from turning over patient medical debt to a credit agency.
“There is no need for medical debt to appear on credit reports, and we can stop the harmful spiral where people have unforeseen, catastrophic medical debt and become unhoused, unemployed, or without a vehicle to get to work,” Mr. Bonta said in a press release.
Ms. Limón said medical debt burdens residents in several ways.
“This debt negatively impacts Californians’ credit history, making it harder to secure a loan, buy a house, or be approved for a credit card,” Ms. Limón said in the press release.
One in three Californians, and more than half of low-income earners, report having medical debt, according to the California Health Care Foundation’s 2024 California Health Policy Survey.
Several consumer advocacy organizations also support the measure. The nonprofit Consumer Federation of California and Health Access California, a nonprofit community organizing group, have also co-sponsored the legislation.
“Simply put, California is falling behind in consumer protection in this area,” said Robert Herrell, executive director of the Consumer Federation of California, in Monday’s press release.
New York and Colorado have already passed similar restrictions.
In Colorado, the governor signed similar credit reporting restrictions in June 2023, making it the first state to enact such legislation.
The Fair Medical Debt Reporting Act, which was signed into law in New York on Dec. 13, 2023, prohibits unpaid medical debt from appearing on credit reports.
Chi Chi Wu, senior attorney at the National Consumer Law Center, said the new law was necessary.
“The law is necessary to protect consumers from unmanageable and unpredictable medical debts and to address the disparate impact of medical debt on black households,” Ms. Wu said in a statement.
In addition to prohibiting health care providers from reporting medical debt to credit agencies, they would also be required to include a provision in future patient contracts, acknowledging the prohibition.
The bill also states that credit reporting agencies should not accept, store, or disclose any information concerning a medical debt.
