To express the sense of the Congress with respect to the price and terms of credit used to pay large medical bills, to amend the Truth in Lending Act with respect to credit card issuers obligations for credit extended to pay medical expenses under certain circumstances, and for other purposes.

March 10, 2005

Mr. HASTINGS of Florida (for himself, Ms. SLAUGHTER, Mr. SANDERS, Mr. OWENS, Mr. STARK, Mr. CUMMINGS, Ms. WASSERMAN SCHULTZ, Mrs. CHRISTENSEN, Mr. LEWIS of Georgia, Mr. CONYERS, Ms. JACKSON-LEE of Texas, Mr. BUTTERFIELD, Mr. MEEK of Florida, Ms. NORTON, Mr. WEXLER, Mr. CLAY, Mr. MICHAUD, and Mr. PAYNE) introduced the following bill; which was referred to the Committee on Financial Services

To express the sense of the Congress with respect to the price and terms of credit used to pay large medical bills, to amend the Truth in Lending Act with respect to credit card issuers obligations for credit extended to pay medical expenses under certain circumstances, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Medical Bills Interest Rate Relief Act'.

SEC. 2. FINDINGS; SENSE OF THE CONGRESS.

(a) Findings- The Congress finds as follows:

(1) Many families and individuals are forced deep into debt by the combination of large medical bills and excessively high interest rates.

(2) The policy journal Health Affairs reports that illness and medical bills cause half of all bankruptcies.

(3) The same report notes that over 2 million Americans are financially ruined by medical care costs each year.

(4) Consumers whose debt consists largely of credit extended to pay medical expenses are 42 percent more likely than other debtors to experience lapses in coverage.

(5) Many of those forced into bankruptcy by medical expenses are middle class and have health insurance.

(6) Major credit card issuers tie credit card interest rates to credit records and credit scores.

(7) However, previously unforeseen and burdensome medical expenses may arise whereby the hospital-mandated schedule of payment is more than the individual can immediately afford.

(8) Hospitals often report late- or delinquent-payers to consumer reporting agencies thereby directly affecting the rates, terms, and availability of credit from other sources that might otherwise be used to pay the medical expenses.

(9) Many individuals and families are forced to place large medical expenses on their credit cards over time.

(10) Credit card issuers are able to raise interest rates on late- and delinquent-payers with impunity and without regards to the nature of the delinquency.

(11) There currently exists no government-enforced ceiling cap on credit card interest rates.

(b) Purpose- The purpose of this Act is to stem the loss from rising instances of payment delinquencies and bankruptcies so that people who meet their bill payment requirements on time and in full receive the lowest interest rates.

(c) Sense of the Congress- It is the sense of the Congress that--

(1) no American family or individual should be forced to choose between the health and life of a loved one and the financial constraints of medical care;

(2) financial institutions, including credit card issuers, should not take financial advantage of unforeseen, nonpreventive, or catastrophic medical situations; and

(3) individuals or families saddled with large medical bills should receive a fair and equitable credit rating that disregards off-schedule medical bill payments.

SEC. 3. CREDIT CARD ISSUERS OBLIGATIONS FOR CREDIT EXTENDED TO PAY MEDICAL EXPENSES.

Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by adding at the end the following new subsection:

`(h) Credit Card Issuers Obligations for Credit Extended to Pay Medical Expenses-

`(1) IN GENERAL- If, with respect to a credit card account under an open end consumer credit plan, the consumer notifies the credit card issuer of anticipated, any upcoming medical expense to be incurred by the consumer, or a member of the consumer's household, within 30 days of the date of the expense--

`(A) the annual percentage rate on credit extended under the plan to pay such medical expenses shall not exceed the annual percentage rate in effect for any outstanding balance of the consumer under the plan at the time such notice is given; and

`(B) the annual percentage rate extended under the plan to pay nonmedical expenses may not be increased on the basis of, or due to, the extension of credit to pay such medical expenses.

`(2) MEDICAL EXPENSES- For purposes of this subsection, the term `medical expenses' includes necessary treatments, drugs, tests, hospital stays, and expenses, doctor fees, and elective surgeries.'.

SEC. 4. CREDIT HISTORY REPORTING REQUIREMENT IN CASE OF CERTAIN MEDICAL EXPENSES.

Section 623 of the Fair Credit Reporting Act (15 U.S.C. 1681s-2) is amended by adding at the end the following new subsection:

`(f) Reports Furnished by Hospitals-

`(1) IN GENERAL- If a consumer, who is unable to make full payments for medical expenses (as defined in section 127(h)(2)) to a hospital or other medical treatment facility in accordance with a schedule of payments imposed by such hospital or facility, continues, in good faith, to make partial payments on the outstanding balance on the prescribed due dates under such schedule, the hospital or facility may not submit negative information relating to the failure of such consumer to maintain the payment schedule in full during the 5-year period beginning when the consumer first fails to make full payment under the payment schedule.

`(2) GOOD FAITH PARTIAL PAYMENT- For purposes of paragraph (1), a consumer shall be deemed to be making partial payments in good faith on the prescribed due dates if the consumer is paying at least 20 percent of the amount of the scheduled payment for each due date.'.

SEC. 5. EFFECTIVE DATE.

This Act and the amendments made by this Act shall take effect on January 1, 2006.

END