Let’s do something to help Mainers who’ve suffered through medical debt

By U.S. Rep. Mike Michaud
(D-Maine)
    No one chooses when accidents happen or when they get sick. And even for those who have insurance, there’s no guarantee their medical bills will be paid when that happens. That’s why it’s outrageous that even when a person pays off their medical debt that their credit scores and economic well-being can suffer.
    That’s why I am working to help pass the “Medical Debt Relief Act,” which would prohibit consumer credit reporting agencies and creditors from using paid off or settled medical debt collections in assessing a consumer’s credit worthiness. Passing this bill would protect hardworking Americans who play by the rules, yet find their credit scores adversely affected for years due to medical debt, large or small, that at one point was sent to collections.
    And the numbers reveal that this is a large, ongoing national problem.
    Millions of Americans struggle with medical debt. In fact, according to the Commonwealth Fund, medical bill problems or accrued medical debt affects roughly 72 million working-age adults in American. And these problems are leading to serious credit issues, which makes it even harder for those affected to stay afloat, much less get ahead in this tough economic climate.
    For 2007, the latest year for which figures are available, 28 million working-age American adults were contacted by a collection agency due to medical debt. But it’s important to consider that nearly two-thirds of those with medical debt had insurance at the time that care was provided. So the problem isn’t as simple as the uninsured having trouble paying their bills.
    Having insurance is clearly not enough. In fact, almost a third of those with insurance reported that they had to contact their insurance company because the insurer did not pay a bill promptly or had denied payment for a claim. Despite these problems that came about through no fault of their own, and despite paying off their medical debt, millions continue to suffer through a reduction in their credit score.
    This is a major problem that must be fixed. Not only because it’s unfair, but because experts say that using medical debt as a measure of creditworthiness is not reliable. In fact, a report by the Federal Reserve found that medical debt collections are more likely to be in dispute, inconsistently reported, and of questionable value in predicting future payment performance because it is “atypical” and “non-predictive.”
    Even if medical debt has been completely paid off or settled, a person’s credit score can be affected for many years. As a result, consumers can be denied credit or pay higher interest rates when buying a home or trying to get a loan. Some also fear that employers will use it in making hiring decisions.
    I encourage all Mainers who have gone through problems with medical debt to email me their stories so that I can share them with congressional leaders and work with my fellow cosponsors of the “Medical Debt Relief Act” to enact changes to the system that will benefit consumers who have played by the rules and done the right thing. This is an issue of fairness and common sense, and it deserves immediate action.