Bill would bar paid-off medical debt from consumer credit reports.

U.S. Sen. Jeff Merkley wants to write into federal law and even extend already-negotiated restrictions on how credit agencies report medical debt, which can damage consumers’ credit scores even after the bills have been paid or settled.

Merkley, an Oregon Democrat, says he will renew his push for legislation that would help consumers when they seek to take out a loan or buy a home or car.

Medical debt, he says, is in a different category.

“Medical expenses are not the result of overspending or deception, but of an unexpected accident or illness outside a consumer’s control,” he said in a conference call with reporters.

Merkley sits on the Senate Banking, Housing and Urban Affairs Committee. Bill cosponsors, all Democrats, are Richard Blumenthal of Connecticut, Richard Durbin of Illinois and Robert Menendez of New Jersey.

A similar bill is pending in the House.

Since Merkley introduced his initial legislation back in 2010, New York Attorney General Eric Schneiderman reached an agreement with the three national credit reporting agencies — Experion, Equifax and Trans Union.

Under the agreement announced a year ago, the agencies agreed on a six-month waiting period before putting medical debt on consumer credit reports. They also agreed to remove from such reports disputed medical debt that is eventually paid by the insurance company — but not similar debt paid off by consumers.

“This leaves a significant hole,” Merkley said. “But it will stay on a credit report and continue to damage the credit of the individual involved for seven years.”

Merkley’s bill would write the elements of the New York agreement into federal law and add the exclusion for consumer-paid medical debt.

“The result would be a win for consumers with more accurate credit reports and a help to so many millions of Americans affected by credit scores,” he said.

Asked why there might be opposition to it, Merkley said: “That has bedeviled me for the past six years. Credit bureaus do not like to be told how to operate.”

Among the 50 organizations in support are the National Credit Reporting Association, National Association of Consumer Advocates and National Patient Advocate Foundation.

Their letter says in part:

“The provisions in your bill will go a long way towards relieving one of the most significant burdens that patients and families face when seeking medical care for an unforeseen illness, and we applaud your efforts to ensure that patients and their families are not unfairly penalized when such difficult situations arise.”

The U.S. Consumer Finance Protection Bureau estimates that medical debt is included on the credit reports of 43 million Americans — and is the only such debt on the reports of 15 million Americans.

“It is an unfortunate conclusion to reach considering the complexity of our medical billing process, and given the time it takes to appeal as to who truly is responsible,” Merkley said.

“As long as it gets worked out at the end and it is paid off, whether by the consumer or the insurance company, it should be treated equally.”

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Adds comments from letter sent by 50 supporting organizations

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