Toni Burton has health insurance and a job, but after her daughter received residential care for severe depression and anxiety, she fell behind on monthly payments on her debt and collectors garnished her bank account.
Her credit was in tatters, with loans out of reach.
Burton is among the 30% of Oregonians who have incurred medical debt in the last two years, according to one survey. More than 100 million Americans are estimated to have unpaid health care bills, with credit ratings that often make it harder to get jobs, housing and loans.
Oregon lawmakers are considering whether to join other states and a federal agency that have restricted medical debt from appearing on credit scores. Backers say medical debt is not an accurate measure of creditworthiness and keeps people mired in economic instability.
“I don’t want anyone else to experience what I’m going through: The pain of having a family member go through a medical crisis and dealing with the astronomical costs,” Burton, a Clackamas County resident, told the Oregon Senate Labor and Business Committee Thursday. “It’s as overwhelming as it gets.”
But critics say the way Oregon’s bill is written would allow patients to dodge paying debts and increase costs for other consumers.
Backers say medical debt is different than other debt
Colorado, California and New York have banned medical debt from being used in patient’s credit scores. In the final days of the Biden administration, the Consumer Financial Protection Bureau adopted regulations banning the practice nationwide.
The regulation is being challenged in court. But bureau officials have encouraged states, including Oregon, to enact similar laws.
Senate Bill 605 would prohibit Oregon health care providers from reporting patients medical debt to a credit bureau or consumer reporting agency.
“I don’t want anyone else to experience what I’m going through: The pain of having a family member go through a medical crisis and dealing with the astronomical costs. It’s as overwhelming as it gets.”
State Sen. Wlnsvey Campos, an Aloha Democrat and co-chief sponsor of the bill, told the committee that the measure was about economic justice. Credit bureaus function as “gatekeepers to our economy,” she said, and people of color are more likely to have medical debt.
The bill is backed by a relatively new group called Oregon Consumer Justice. Its policy director, Chris Coughlin, told The Lund Report that medical debt is complicated by the murkiness of the U.S. health care system.
She said that patients often do not immediately have a clear understanding of how much they owe for care as they sort through letters from their insurers labeled “this is not a bill.”
Medical bills are often inaccurate and patients dispute charges as inflated, she said. But those unpaid bills appear on credit reports or are referred to collection agencies before patients can make sense of what their insurance covers.
Burton told lawmakers she made monthly payments of $400 on her debt but fell behind after her son died in 2019 and money became tight during the pandemic. Eventually she was sued by a debt collector who garnished her bank account.
“I’m working to dig out of this hole,” she said. “But my options for staying afloat and covering my bills are limited since my credit score is so low. And it just keeps getting worse by the month because they keep raising it with interest.”
Opponents say bill is unclear and will have downsides
The bill would redefine the state’s legal definition of medical debt to exclude the amount a person owes to their credit card or company to a bank they used to pay for medical care.
“It contradicts the plain meaning of the definition of medical debt,” David Reid, general counsel for the debt collectors trade group Receivables Management Association International, told the committee.
A consumer could use a home equity line of credit to pay for their child’s braces to avoid it showing up on a credit report, he said.
Fawn Barrie, a lobbyist for the Oregon Liability Reform Coalition, told the committee that the bill’s definitions of contracts and medical providers were confusing and could open them up to penalties or litigation.
The bill would also ban debt patients incur on health care credit cards from being reported to credit report agencies.
State Sen. Cedric Hayden, a Fall Creek Republican and member of the committee, said this could have unintended consequences and providers who use health care credit cards would have to increase interest or fees to make them viable.
A recent survey by the Oregon Values and Beliefs Center found that hospitals were the source of 41% of Oregonians medical debt.
Troy Duker, lobbyist for the Association of Oregon Hospitals, told the committee his group opposes the bill because it could add more administrative tasks. He also said it was unclear how it would affect Oregon hospitals, which have been subject to multiple bills in recent years intended to prevent low-income patients from falling into debt.
