H.R. 3421 - Medical Debt Relief Act

[dbroncos78087]

Congress is weighing a new bill that would keep medical debt from wreaking havoc on millions of consumers' credit ratings.

On Wednesday, the U.S. House of Representatives passed, by a vote of 336 to 82, the Medical Debt Relief Act, also known as H.R. 3421.

The bill, originally introduced last year in the House Financial Services Committee, would make it illegal to include medical debts on a consumer's credit reports, if those debts were paid or settled more than 45 days before the credit report is issued.

According to credit expert Rodney Anderson, who pushed for this bill and who has examined thousands of credit reports, some 40% of all credit reports have medical collections on them. According to his statistics, 12% of those collections have been paid; the other 88% were unpaid.

Source: Walletpop.com

Here is the text of the bill, dont worry it is only three pages.

[Patsfan56]

I'm one of those people. I am working on paying over 12,000 in medical bills for my son.

[dbroncos78087]

I'm one of those people. I am working on paying over 12,000 in medical bills for my son.

Unfortunately i dont think it applies to unpaid or currently-being paid debt. The premise, as i understand it, is that they cant take a large chunk (such as medical debt) and use it to extrapolate or interpret your credit score in that regard. Meaning that if you have debt for five years like this:

2006: 5,000
2007: 6,000
2008: 5,500
2009: 14,500 [medical bills total 9,000 - other 5,500]
2010: 5,000

They cant apply the 9,000, which is an abnormal value to your credit score. I am by no means a financial analyst, but i think that is how it works. It doesnt apply to current debt.

[cabernetluver]

This is really a simple law. It is just stating that medical costs are a unique category of expense. As such, it is simply stating that they will not be grouped with other types of consumer debt and as such should not be reported or judged with other types of consumer debt.

Because it is not necessarily a discretionary expense, it seems like reasonable point. I am not sure if it is the best solution, but it at least is addressing a real problem.

[behindmydesk]

This is really a simple law. It is just stating that medical costs are a unique category of expense. As such, it is simply stating that they will not be grouped with other types of consumer debt and as such should not be reported or judged with other types of consumer debt.

Because it is not necessarily a discretionary expense, it seems like reasonable point. I am not sure if it is the best solution, but it at least is addressing a real problem.

maybe i'm misreading the law. But to me it's still debt. And it's still going to limit your ability to pay back new loans in the future.

5k in medical or 5 in credit card is still 5k you need to pay back.

[cabernetluver]

maybe i'm misreading the law. But to me it's still debt. And it's still going to limit your ability to pay back new loans in the future.

5k in medical or 5 in credit card is still 5k you need to pay back.

You are correct in your analysis as far as it goes, but, you did not carry it out. While debt is debt, how one handles debt is not necessarily reflected by medical costs. What this law is saying is that this is a separate category, and needs to be treated as such.

This is not to deny your point, it is just to recognize a truth, that this is not the same as buying a car that you cannot afford, or going on a spending spree at the mall.

[behindmydesk]

You are correct in your analysis as far as it goes, but, you did not carry it out. While debt is debt, how one handles debt is not necessarily reflected by medical costs. What this law is saying is that this is a separate category, and needs to be treated as such.

This is not to deny your point, it is just to recognize a truth, that this is not the same as buying a car that you cannot afford, or going on a spending spree at the mall.

True, it shows a pattern of behavior, but it still is equal on debt to income ratio.

[dbroncos78087]

True, it shows a pattern of behavior, but it still is equal on debt to income ratio.

But i think what it is saying is that they cant take it into account as a pattern. My example above if they wanted to look at it in a cycle i am going to have an extra 9000 dollars of debt every 5 years and that is much less likely to get a loan even when there is no reason to assume i will be taking on 9000 in debt each year.

The bill specifically refers to debt that has been paid off, not current debt. So if you currently have 10000 in debt not paid off they can take that into account, but if you just paid it off then they cant take it into account.

[DodgersFan28]

The bill, originally introduced last year in the House Financial Services Committee, would make it illegal to include medical debts on a consumer's credit reports, if those debts were paid or settled more than 45 days before the credit report is issued.

While I don't fully understand this bit, it does seem like a key point that is being overlooked.

Looks like to me that the only debt in question is medical debt that has already been paid or settled, meaning it isn't really debt anymore. The idea being that this debt that isn't really debt & hasn't been for 45 days or more is still showing up as debt on a credit report, and this would put a stop to that.

I don't read anything more that this bill would do, but I can support that at least. Have I gone wrong somewhere in my analysis?

[PraiseJesus]

Medical prices need to get under control. How do you put a price on someones health or life? It seems like they can charge whatever they want for it.

I don't know what the solution is, but this is a problem that needs to be solved.

This is one of the ONLY times I welcome government intervention to keep prices under control.