California governor signs law banning medical debt from credit reports

By Molly Castle Work for KFF Health News

Californians with medical debt will no longer have to worry about unpaid medical bills showing up on their credit reports under legislation signed Tuesday by Gov. Gavin Newsom, adding the nation’s most populous state to a growing effort to protect consumers squeezed by unaffordable medical bills.

The bill, by Sen. Monique Limón (D-Santa Barbara) and backed by Democratic Attorney General Rob Bonta, will block health care providers, as well as any contracted collection agency, from sharing a patient’s medical debt with credit reporting agencies. At least eight states have banned medical bills from consumer credit reports in the past two years. In June, the Biden administration proposed similar federal protections, but it’s unclear when the rules will be enacted—or, if former President Donald Trump is elected again, if they will be at all.

“Nobody chooses to get sick, and then your credit gets ruined,” said Chi Chi Wu, a senior attorney with the National Consumer Law Center. “That’s why we encourage states to keep adopting laws. In case something goes wrong at the federal level, the states could protect their own consumers.”