SACO — A new state law that takes effect Wednesday is designed to help Mainers with medical debt protect their credit ratings.

Sen. Donna Bailey, D-Saco, sponsored the measure after national protections were eliminated following a Texas court case.

“The states kind of have to pick up if there are protections or laws that we think make sense that are going away at the federal level and to put it in place at the state level,” she said.

Her measure, LD 558, was signed into law by Gov. Janet Mills in June. And like dozens of other bills, it officially goes into effect Wednesday, 90 days after the Legislature adjourned.

The new law prohibits credit reporting agencies from listing medical debt on credit reports. It also prohibits debt collectors from informing the agencies about the debt.

During testimony on the bill in March, Kate Ende of Consumers for Affordable Health Care said a recent poll shows nearly half of Maine families have incurred medical debt in the last two years.

Of those, one in four families has medical debt of $5,000 or more. More than half said that debt affected their credit score, she told members of the Health Coverage, Insurance and Financial Services Committee.

The Maine Hospital Association testified neither for nor against the bill but raised questions about how hospitals will get paid if they can’t refer people to a credit reporting agency.

“The state should do more than tell providers what they can’t do to collect debts,” said Jeff Austin, a spokesman for the association. “What do you want us to do when patients owe us money for the care we provided?”

Bailey said hospitals and other health care providers can still sue patients to get paid or work out payment plans.

“The thing about medical debt is nobody chooses to incur medical debt,” she said. “No one chooses to need emergency surgery, no one chooses to get cancer.”

Bailey said it’s important to make the distinction between medical debt and other debt, such as when someone buys a new television on their credit card.

“They went to the emergency room, and they found out they needed their appendix out and they haven’t been able to pay that bill,” she said. “So, it isn’t really an accurate measure of someone’s credit worthiness.”

MaineHealth, the state’s largest health care provider, testified in opposition to the bill, saying that the system had to absorb nearly $57 million in unpaid bills in 2023. Paul Chausse, a vice president at MaineHealth, told lawmakers that “the explosion of high deductible health plans” requires patients to come up with anywhere from $3,000 to $10,000 out of pocket.

“One of the only tools hospitals have left to collect balances after insurance is reporting medical debt to the credit bureaus,” he said.

Bailey said the credit reporting agencies are trying to fight the restrictions in court, so it’s possible the law could eventually be put on hold.

But for now, it takes effect Wednesday.

“I have a lot of faith the attorney general is going to be able to defend it successfully in court,” she said.