Medical Debt Relief Act Gets a Hearing

A mark-up, actually. Next Tuesday, July 27th, the House Financial Services Committee will hold a mark-up on a number of bills, one of them is the “Medical Debt Relief Act,” H.R. 3421.

H.R. 3421 is a bill sponsored by Rep. Mary Jo Kilroy (D-OH) and a bipartisan group of 104 co-sponsors that would address the issue of medical debt and the crippling impact that medical debt can have on an individual’s credit report–even after the debt has been paid off. As we all know, credit scores have become integral to a person’s relationship to mainstream financial services. In some cases a bad score can impact an individual’s employability and the rates paid on a credit card or a mortgage.

According to the bill’s sponsors, a staggering 28 million Americans were contacted by a collections agency regarding medical debt in 2007. The bill is intended to relieve some of the pressure that can come about as a result of the capricious nature of severe illness, the bill finds:

Medical debt is unique because, unlike consumer debt, Americans don’t get to choose when accidents happen or when their genetic traits will catch up to their health profile.

Rep. Kilroy’s bill would insert a clause into the Fair Credit Reporting Act that would lead to medical debt being eliminated from credit reporting within 30 days of the debt being fully paid off. A companion measure, S. 3419 awaits action in the Senate Banking Committee.

This is the kind of simple, common-sense updating of existing rules and regulations that can have significant benefit to millions of American families. As credit tightens and economic conditions remain fragile, it’s good to see this kind of legislation receiving consideration. Credit scores have probably become too important, and the recent Dodd-Frank bill takes steps to make some aspects of credit scoring more transparent. The Medical Debt Relief Act steps in and tries to supply something even better than transparency, a simple measure of fairness.