Statement: Governor Newsom signs bill to tackle medical debt

Sacramento, Calif – Gov. Gavin Newsom signed Senate Bill 1061 Tuesday, which will prohibit the appearance of medical debt on California consumer credit reports. The legislation is similar to laws passed in New York and Colorado, and a federal rulemaking underway at the Consumer Financial Protection Bureau (CFPB).

In 2022, the CFPB issued a report that exposed how widespread the problem of medical debt is for American families. More than $88 billion in medical bills are currently included in credit reports. These debts, even when paid, can remain on credit reports for seven years. Consequently, affected individuals are less likely to get loans, buy a home, or in some cases even get a job. The report also showed that medical billing data on a credit report is “less predictive of future repayment than reporting on traditional credit obligations.”

Senate Bill 1061 is authored by state Sen. Monique Limon and sponsored by California Attorney General Rob Bonta, CALPIRG, the National Consumer Law Center, the California Low-Income Consumer Coalition, the Consumer Federation of California, Health Access California and the California Nurses Association. 

In response to the bill being signed, CALPIRG State Director Jenn Engstrom issued the following statement:

“We’ve known for years that medical debt doesn’t predict credit defaults, nor does it accurately predict a person’s desire and willingness to pay off loans. Thanks to the Governor’s signature, as well as leadership from Senator Limon and Attorney General Bonta, this new law will help create a fair credit system in California that doesn’t penalize people for life events they can’t control, like getting sick.”