Illinois Senate passes legislation that would strip medical debt from credit reports

SPRINGFIELD — The Illinois Senate has approved a measure that would bar consumer reporting agencies from including a person’s medical debt in their credit reports.

“You cannot predict when you get sick or suffer an injury. You may be the best financial (planner) in the world having paid all your bills, but unexpectedly get sick and suddenly you can’t pay your bills,” state Sen. Steve Stadelman, a Rockford-area Democrat, said during a news conference at the state Capitol. “No one should have to go into medical debt just to get the quality health care they need. No one should ever have to make a horrible choice between their physical health and their financial health.”

The Senate passed the measure in a bipartisan 58-0 vote on Thursday, and it now heads to the House for consideration.

The legislation makes it illegal for consumer reporting agencies to “make, create, or furnish any consumer report or credit report containing, incorporating, or reflecting any adverse information” related to a consumer’s medical debt. However, the measure does not apply to medical debt charged to a credit card or an open-end or closed-end extension of credit from a bank unless the credit extension was limited to the purchase of health care services.

“This legislation, I want to stress, does not mean consumers don’t have to pay that medical debt and their medical bills,” Stadelman said. “I just believe medical debt is different than other debt. It’s spontaneous.”

Amid rising medical costs and debt, states including New York and Colorado have recently passed laws similar to what Stadelman has proposed.

Gov. J.B. Pritzker separately has proposed erasing as much as $1 billion in medical debt for more than 300,000 Illinois families as part of his latest state budget plan for the fiscal year beginning July 1. An earlier initiative in Cook County was on track to wipe out medical bills for around 73,000 residents as of last year. It was targeted at lower income residents and those who had medical debt that was 5% or more of their household income.

“It’s a complicated, wide-ranging problem. So any tool we can use to address this problem I think (is) another good solution to it,” Stadelman said.

Dan Schneider, a supervisory attorney for Legal Access Chicago, a public interest law firm that helps people in poverty, said he supports the bill and that medical debt deserves to be kept separate from other financial burdens.

“Think about what a credit score is. It’s supposed to be a measure of how risky you are to make a loan to, to approve a credit card or a mortgage. But credit cards and mortgages are voluntary agreements that people enter into, unlike medical debt,” Schneider said during the news conference. “I mean, when’s the last time you ever heard (of) someone getting an elective kidney transplant, just for fun?”