Naquetta Ricks,vserving as a member of the Colorado House of Representatives from the 40th district was one of the sponsors of the bill. Credit: Colorado Sentinel

A groundbreaking consumer protection law came into effect in the state of Colorado recently. The law, House Bill 23-1126, protects consumers with medical debt from credit harm by prohibiting the inclusion of medical debt information on credit reports.

Colorado legislative representatives Naquetta Ricks, Sen.Tony Exum and Rep. Ron Weinberg who all worked together on getting this bill passed have expressed their delight at the passage as it will help tackle the collateral burdens of medical debt in Colorado.

Colorado is the first state in the country to enact such legislation that will see more than 700,000 Coloradans with medical debt have that debt removed from their credit scores irrespective of their citizenship or immigration status.

The bill will prohibit consumer reporting agencies in Colorado from including medical debt in credit reports through July 1, 2028. The bill would also require debt collectors to notify Coloradans that medical debt will no longer be included in credit reports.

Proponents of the bill also argued that victims of medical emergencies should not be punished for accumulating debt since they often have no choice but to get medical care. They said medical debt does not indicate financial irresponsibility, such as debt accrued by voluntarily buying an overly expensive car or house.

Opponents countered that while medical debt does not indicate financial irresponsibility, it can still indicate financial instability. One of the Republican legislators who opposed the bill also claim there is a need to have some sort of level playing field for lenders, or else they’ll just simply stop lending.

According to a 2022 report from the federal Consumer Financial Protection Bureau, medical debt is the leading cause of bankruptcy nationwide. In Colorado, more than 12% of residents are in collections for medical debt, and the state’s combined medical debt totals $1.3 billion.

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. Tony Exum 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.

Ron Weinberg, a Republican state representative from Loveland, Colorado was also one of the sponsors of the bill. Credit: Colorado Sun

In the Senate, no opponents spoke against the bill on the floor, but everyone who voted down the bill also voted down at least one of the two last-minute amendments made during the measure’s final reading. The amendments added the July 2028 expiration date and created a $200,000 study to consider the effects of the bill on a person’s creditworthiness, access to credit, medical debt burden and economic stability. Senate Majority Leader Dominick Moreno said the amendments were requested by the governor’s office.

The bill passed the legislature almost entirely along party lines, with all Democrats in both chambers voting “yes” and all but one Republican voting “no.” The Republican who supported the bill is Rep. Ron Weinberg who sponsored the measure in the House with Rep. Naquetta Ricks.

Thomas Exum, a Colorado State Senator since 2023 also worked alongside Ricks and Weinberg to get the bill passed. Credit: Colorado Radio

For many Coloradans, this can most definitely make all the difference when trying to get an apartment, a job, a loan, an affordable interest rate. It smoothens the path forward after a financially devastating medical event. Under the new law, the onus is on the credit bureaus — not consumers — to keep medical debt information off Coloradans’ credit reports. However, if someone with medical debt has an important life event on the horizon that involves a review of their credit report or credit score they may want to review their credit report now, to check that their medical debt information has been removed properly.

It is important to state clearly though, this law does not make one’s medical debt go away. This law only keeps information about a debtor’s medical debt from being included on their credit report and factored into their credit score.

Hospitals, doctors, and debt collectors can still pressure them to pay their medical debts in other ways, like calling, sending letters, and even taking the debtor to court for non-compliance.