The Oregon legislature has passed a bill banning medical debt credit reporting, and while it explicitly applies to credit cards issued under plans offered specifically for the payment of medical services, it does not address mixed-use credit products.
Driving the news: The Oregon Senate yesterday voted 18-12 to pass Senate Bill 605, which would prevent medical debt from appearing on consumer credit reports. The bill, previously approved by the House with amendments, now awaits the signature of Gov. Tina Kotek.
Why it matters: If signed, the bill will bar hospitals, clinics, debt collectors, and issuers of medical credit cards from reporting unpaid medical bills to credit bureaus. The legislation applies to a broad spectrum of medical costs, including services, provider fees, equipment, and medication, while explicitly excluding purely elective cosmetic procedures.
Key details:
- Effective date: January 1, 2026.
- SB 605 broadly defines medical debt as any monetary obligation owed to providers or charged to purpose-specific medical credit products, including debts that are not past due or that were partially or fully paid.
- The bill includes costs for medical treatment, devices, drugs, supplies, patient care, and services — while excluding cosmetic surgery not related to reconstruction.
- The law does not apply retroactively. Medical debt incurred before January 1, 2026, may still appear on credit reports until it ages off under existing rules (typically after seven years).
- Reporting medical debt is declared an unlawful practice under Oregon’s Unlawful Trade Practices Act, and courts may declare such debts void and uncollectible if reported in violation of the law
State context: A November survey by the Oregon Values and Beliefs Center reported that roughly one in three Oregonians carried medical debt within the past two years. A separate Oregon Health Authority study found that nearly 11% of residents were unable to pay medical bills in the past year.
National backdrop: SB 605 reflects a broader national trend. Several states — including California, Washington, Illinois, and New York — have enacted similar laws. The bill also aligns with a now-stalled federal rule from the Consumer Financial Protection Bureau (CFPB) that aimed to remove medical debt from credit reports and prevent its use in credit decisions. The federal rule was set to take effect in March 2025 but is currently under legal challenge.
Opposition viewpoint: The Oregon Bankers Association raised concerns that the bill lacks clarity on whether the restrictions apply strictly to medical-only credit cards, potentially forcing banks to examine purchase-level data, which they typically do not receive. The Consumer Data Industry Association also opposed the bill, warning it may lead to less complete credit reports and higher risks for lenders.
What’s next: Governor Kotek is expected to sign the bill. Once enacted, Oregon will join a growing list of states creating their own consumer protection rules regarding the treatment of medical debt in credit reporting.
