A hearing was held yesterday by the House Health Committee of the Ohio legislature to discuss the Medical Debt Fairness Act, which aims to remove medical debts from consumers’ credit reports and provide strong protections for those with medical debts. A bipartisan group of lawmakers introduced the bill, House Bill 257, earlier this year. Members of the industry opposing the bill submitted written testimony for yesterday’s hearing.
What the bill does: HB 257, which is being sponsored by Rep. Michele Grim. a Democrat, and Rep. Jean Schmidt, a Republican, would:
- Cap the maximum interest rate on medical debt at 3% per year.
- Prohibit wage garnishment to collect medical debts.
- Prohibit reporting medical debt to credit reporting agencies.
The bill also defines “medical debt” broadly, covering obligations for hospital, surgical, and medical services, products, and device.
Supporters say: Rep. Grim argued that medical debt is often unexpected and not a good measure of creditworthiness. “It doesn’t make sense for it to be on a credit report,” she told the committee.
Opposition testimony:
- ACA International warned that the bill takes a “one-size-fits-all” approach and would jeopardize smaller, rural hospitals already operating on thin margins.
- Ohio Receivables Management Association said removing credit reporting and garnishment would disincentivize repayment and eliminate tools that currently help bring consumers to the table to arrange payment plans.
- Revco Solutions, a revenue cycle management company, argued that a 3% cap would make flexible payment plans economically unworkable and could push hospitals to demand larger up-front payments. The company also pointed to Colorado’s experience with similar reforms, which it said led to higher costs for paying patients and reduced services.
- Consumer Data Industry Association emphasized that the proposal conflicts with the federal Fair Credit Reporting Act, which preempts state laws regulating what information can appear on credit reports. CDIA cited a July 2025 federal court decision in Texas striking down a Consumer Financial Protection Bureau rule on medical debt reporting, which it said signals similar state laws could be invalidated.
What’s next: The House Health Committee is weighing testimony as the bill advances. Sponsors said they are working to clarify the definition of “medical debt” in response to concerns from the Ohio Bankers League.
