More than 700,000 Coloradans have medical debt. A new bill is seeking to remove that debt from their credit scores and credit reports.
The state House of Representative passed House Bill 1126 on Tuesday. If enacted, the bill would prohibit consumer reporting agencies in Colorado from including medical debt in credit reports and require debt collectors to notify Coloradans that medical debt will no longer be included in credit reports.
The bill is now being sent to the Senate for consideration.
“Medical debt is not an indication of a person’s ability to pay,” said bill sponsor Rep. Naquetta Ricks, D-Aurora. “We’re not saying that people are not responsible for their medical debt … we just don’t want it to be a noose around your neck everywhere you go.”
Unpaid medical bills sent to collections are shared with consumer reporting agencies that generate credit scores and reports used by banks, landlords, employers and other companies. Ricks said the negative impacts medical debt has on these credit scores and reports results in people being denied everything from business loans to insurance licenses to housing.
Kayce Atencio of Denver said, at 19 years old, he suffered a cardiac arrest due to a genetic mutation, leading him to receive heart surgery and be hospitalized for several weeks. Due to issues with his insurance company, Atencio said he was left with $50,000 in medical debt that he could not pay.
With his credit score destroyed at such a young age, Atencio said he was unable to rent an apartment, lease a car or even get a credit card.
“It felt like, at 19 years old, my life was over,” Atencio said while testifying in support of the bill. “How could something I had no control over effectively ruin my financial future before it had even started?”
Medical debt is the leading cause of bankruptcy nationwide. In Colorado, over 12% of residents are in collections for medical debt and the state’s combined medical debt totals $1.3 billion, according to a 2022 report from the federal Consumer Financial Protection Bureau.
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The House voted 46-18 to advance the bill on Tuesday, with all Democrats in support of the bill and all but one Republican in opposition.
Opponents argued that while medical debt does not indicate financial irresponsibility, it can still indicate financial instability.
“It is still a financial liability. If you’re going to go and get a car loan, the bank or whatever institution you’re borrowing from needs to make sure that you have the capability to repay that debt,” said Rep. Lisa Frizell, R-Castle Rock, who voted against the bill. “We need to have some sort of level playing field for lenders, or else they’ll just simply stop lending.”
The bill is opposed by the Emergency Medical Services Association of Colorado, while other groups sought to amend the bill, including the Colorado Bankers Association, Colorado Mortgage Lenders Association and Colorado Creditor Bar Association.
Organizations supporting the bill include the Colorado Hospital Association, Chronic Care Collaborative, Colorado Center on Law and Policy, Leukemia and Lymphoma Society, Colorado Children's Campaign, Colorado Coalition for the Homeless, Colorado Community Health Network, Mental Health Colorado and Healthier Colorado.
The only Republican who voted in support of the bill was Rep. Ron Weinberg, R-Loveland, who also sponsored the bill alongside Ricks.
“It’s absolutely ridiculous once it gets onto your consumer report,” Weinberg said of medical debt. “There’s no reason for this to be on the report since it can fluctuate. You call the medical facility, you get charged $100,000, you negotiate down to $5,000. This is a no brainer one for me.”
The advancement of HB 1126 comes as the legislature is also considering a bill to cap interest rates for medical debt at 3% — down from 8% — and implement other consumer protections. That bill, Senate Bill 93, passed out of committee last week and is scheduled to be considered by the full Senate on Thursday.
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