AG Campbell wants to ban medical debt from affecting credit scores

Attorney General Andrea Campbell wants Massachusetts to prohibit health care providers from reporting medical debt to credit reporting agencies.

Why it matters: The moratorium, one of several recommendations in Campbell’s report about medical debt released Wednesday, has gained steam in the federal government and several statesas a way to help residents struggling to cover costs.

What they’re saying: “The vast majority of Massachusetts residents have some form of health care coverage, but regardless of coverage status, out-of-pocket costs remain unaffordable,” Campbell said in a statement.

Zoom out: The Consumer Financial Protection Bureau proposed a rule this year to remove medical bills from Americans’ credit reports.

• It also would prohibit creditors from relying on medical bills when considering a borrower’s credit application.

Yes, but: The rule could get sidelined under a second Trump administration, which banking leaders predict will limit the CFPB’s scope altogether.

The latest: Campbell plans to discuss the report Thursday at the Health Policy Commission’s Annual Cost Trends Hearing.

Other recommendations include:

• Tracking by community how much households get billed for medical services versus how much they can afford to pay. That would become the basis of a state health care affordability benchmark, Campbell says.
• Making providers allow discounts for deductibles and other policy changes to protect consumers.
• Making providers proactively offer affordable payment plans.

By the numbers: Massachusetts residents have a median debt of $1,438 in collections, per the Urban Institute‘s latest data, cited in the AG’s report.

• That doesn’t account for medical debt that hasn’t yet gone to collections.
• Lower-income residents were more likely to spend a higher share of their income on cost-sharing for medical services — co-pays, co-insurance and deductibles — compared with higher-income residents.
• They’re also more likely to face hospital medical debt.

Between the lines: The report highlighted several factors increasing medical debt overall for Massachusetts residents and exacerbating debt for lower-income residents:

• The number of residents who get behavioral health care out of network
• Other unexpected out-of-network costs, like ambulance rides.
• The shift away from plans with no deductibles, which tend to have higher premiums than higher-deductible plans — a trend that has affected residents at all income levels.