Healthcare Technology Featured Article

August 06, 2012

Senators Want Medical Debt Reporting to be Part of Consumer Financial Protection Bureau

The issue of healthcare, and its impact on society as a whole, is impossible to understate. Considering its increasing impact on our wallets, meanwhile, it's not surprising that the market is starting to draw attention from Congressional authorities.

Senator Jeff Merkley of Oregon, joined by Senator Chuck Schumer of New York, Senator Robert Menendez of New Jersey and Senator Sherrod Brown of Ohio have thus come together to send a letter to the Consumer Financial Protection Bureau, specifically in regard to how healthcare-related debts are reported to credit agencies.

The coalition of Senators put together a letter addressed to the CFPB's Director, Richard Cordray, in an attempt to detail the impact of medical debt collection on consumer credit figures.

The letter primarily focused on problems of inaccurate information going out to credit ratings services, which in turn is negatively affecting those with outstanding medical bills. This has even been seen to impact those with medical insurance, as in some cases, bills are sent to collections even before those with insurance know they have a responsibility to pay some part the insurance didn't cover, resulting in impacts to a credit score, in some cases measuring up to 100 point deductions that remain on the history for as long as seven years.

Medical debt is therefore something of an unusual problem in terms of credit reporting, as the problem isn't so much one of non-payment, but rather a problem of insufficiently rapid payment, as providers are seen "jumping the gun" and sending bills on to collections without any sort of consultation with the people who would pay the bill, if they actually knew the bill existed.

Interestingly, the four Senators in question are also co-sponsors of what's called the Medical Debt Responsibility Act, which in turn would allow credit ratings agencies just 45 days to completely remove medical debt that has either been settled or paid in full from credit reports.

On the one hand, this is a perfectly valid point. Why allow what amounts to overzealous record-keeping to put black marks on someone's credit report that really shouldn't be there, especially since all that really separates the black mark in question from being completely nonexistent is a matter of time?

Yet at the same time, the timing on this one is interesting in and of itself. Remember that early November – or a period of time known as "a little under three months from now" – is an election period, for Senators, Representatives and even the Presidency this year, so a move to be clearly seen as "on the consumers' side" can't hurt.

Whether this is politically motivated or a genuine help for consumers remains to be seen, but it's every bit as clear that, either way, if this goes through it will be good news indeed for those whose medical bills are posing a threat to their credit rating.

Edited by Braden Becker
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