Over 100 million people across the nation, including New Jerseyans, struggle with medical debt every day. What makes medical debt different is that it is incurred involuntarily. Currently, any unpaid debt can be reported to credit-reporting agencies. No one’s credit should be ruined just because they get sick, and New Jersey policymakers can ensure this never happens by banning the reporting of all medical debt.

Credit reports have evolved beyond being mere financial indicators; they now play a pivotal role in securing jobs, housing and making significant purchases. In New Jersey, credit scores significantly influence auto insurance rates. The last thing we want to do is deny access to these necessities because medical debt appears on a credit report — especially when 30% to 80% of medical billings are found to be erroneous.

It’s important to note that a ban on medical debt reporting to credit agencies only protects individuals’ credit standings; it does not release them from the responsibility of paying the debt or shield them from collection actions.

According to a 2022 report from Altarum Healthcare Value Hub, 40% of New Jerseyans with medical debt report owing $5,000 or more. Most commonly, 62% of medical debt results from a single incident, like an accident or injury, chronic disease treatment or services related to dental, vision, or hearing.

This demonstrates the urgent need for more comprehensive actions to relieve the burden on individuals and families. With so much at stake, we require a policy agenda that includes preventive cost-control measures, alleviates current debt, reduces legal actions, eliminates administrative errors and protects patients from crippling financial repercussions.

Address the root causes

We applaud Gov. Phil Murphy for continuing to make medical debt a priority in his policy agenda. The efforts raised in the State of the State address will help some patients and their families reduce or pay off their debt. Together Murphy and the Legislature have protected New Jersey patients from surprise medical bills, expanded Medicaid health care coverage, including to all children, created a pathway for the state’s first buy-in option for adults, increased affordability by providing state subsidies for ACA enrollees and established a prescription drug affordability council.

Moving forward, our state’s policymakers should adopt the strong policies recently enacted in Colorado and New York, which include universal bans prohibiting anyone, including collection agencies, from reporting medical debt to credit-reporting agencies and which provide enforcement mechanisms to ensure violators are held accountable.

We must address the root causes of medical debt including high health-care service costs and inadequate insurance coverage. We need to create affordable coverage options for the nearly 7% of New Jersey residents who remain uninsured and rein in high out-of-pocket costs for those who are insured.

While we continue to address medical debt causes, it is unjust to allow communities and families to suffer more than they already have and to be ruined economically because of illness. Credit reporting has become ubiquitous to accessing essentials for living. In the collective effort to make New Jersey more affordable, stronger and fairer for all, we must protect health care patients and prohibit all medical debt credit reporting.