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New York OKs bill banning the reporting of medical debt to credit reporting agencies

Consumer Reports calls on Governor Hochul to sign the Fair Medical Debt Reporting Act into law 

ALBANY, NY – New York could become the second state following Colorado to prohibit medical debt from being reported to credit reporting agencies or included in a consumer’s credit report after the Assembly passed a bill banning the practice today. Consumer Reports had urged state lawmakers to support the Fair Medical Debt Reporting Act (A.6275A/S4907A, sponsored by Assembly Member Amy Paulin and Senator Gustavo Rivera) and is now calling on Governor Kathy Hochul to sign it into law.

“Medical debt is a serious problem that creates a crushing burden for many New Yorkers and unfairly undermines their financial security,” said Chuck Bell, advocacy program director for Consumer Reports. “A bad credit record can make it much more expensive or impossible for a patient to rent a home, buy a car or home, or secure a loan. This bill protects the right of New Yorkers to obtain the health care services they need without fear of having their credit records unfairly ruined.”

An estimated 100 million Americans have medical debt and one in five have reported being contacted by a debt collector over an unpaid medical bill. According to the Consumer Financial Protection Bureau, twenty percent of Americans also have at least one medical debt collection item in their credit reports, and over half of collection items are for medical debts. The problem disproportionately affects people of color: 28 percent of Black and 22 percent of Hispanic people carry medical debt compared to 17 percent of whites.

A Community Services Society of New York survey found that 41 percent of New Yorkers have either appealed a medical bill or paid one they didn’t think they owed for fear of being sued or placed into collections. Another 38 percent avoided care or sacrificed other necessities because of the cost of health care. According to a national survey by the Kaiser Family Foundation, two-thirds of adults with medical debt said that they or a member of their household have put off getting needed medical care because of costs.

While the national credit reporting agencies have voluntarily agreed not to report medical debts under $500, many New Yorkers receive medical bills much higher than this threshold.  The bill passed today provides additional protections for New York, where health care bills can be higher than the national average and are subject to ongoing increases through inflation.