(Olympia, WA), State lawmakers are forwarding a bill that would change how medical debt impacts Washingtonians’ credit scores.
Senate Bill 5480 doesn’t erase medical debt completely but “Declares a medical debt void and unenforceable if it is reported to a consumer credit reporting agency or credit bureau,” according to a Senate Bill Report.
The report goes on to say the bill “Prohibits specific entities from reporting medical debts to a consumer credit reporting agency or credit bureau, on pain of committing a violation of the Consumer Protection Act.
According to an Economic Opportunity Institute article from the summer of 2024, approximately 95% of people in Washington have health insurance, but the amount of money being spent is still outpacing what they can afford.
On the plus side, according to the article, 6.5% of adults in Washington have medical debt, which is lower than in many other states.
According to the EOI article, the average premium on the Washington marketplace, the Health Benefit Exchange, has increased 100% since its inception in 2014.
Elizabeth New, director of the Center for Health Care at the Washington Policy Center think tank, wrote a blog opposing the bill.
She spoke with The Center Square.
“The majority party is constantly talking about skyrocketing healthcare costs and yet everything they do increases the cost of care, it seems,” New said.
She noted the bill requires health care providers to notify patients before service that they cannot enforce collection if the debt is reported to a credit bureau.
“We’re encouraging people not to pay medical bills,” New said.
According to HB 5480, patients must be told upfront that they can potentially receive care without consequences for non-payment.
New suggested the bill isn’t necessary as health care providers are more than willing to work with patients who struggle to pay their bills
“Hospitals work with people, and providers work with people to set up payment plans,” she said. “There’s financial aid through hospitals, and always people willing to create options, and on top of that, our state does an incredible job with charity care, in my opinion.”
During a Thursday Senate Law & Justice Committee hearing, SB 5480 was up for executive session, where several amendments were considered, including one that would ensure patients undergoing cosmetic procedures would not be eligible for having medical debt voided.
That amendment was adopted.
Sen. Jeff Holy, R-Spokane Heights, the ranking Republican on the committee, spoke just ahead of a final committee vote on the bill, recommending a no vote.
“We have another aspect of government overreach here to where we are again involving ourselves in business activities that will result in the socialization of the cost of credit to everybody out there, not just the few,” he said. “We are stepping on the toes of the process as it exists here for debt collection and the reporting agencies out there.”
As New noted in her blog post, medical debt doesn’t just disappear.
“When one person doesn’t pay, someone else has to cover the cost,” she wrote. “Hospitals and doctors will likely raise prices on insured patients and those who pay out of pocket to compensate for increased losses.
Democrats passed the bill out of committee on Thursday, sending it to the Senate Rules Committee.
