States eye solutions as medical debt bankrupts millions

FILE – The gold dome of the Colorado State Capitol in Denver on March 23, 2023. In Colorado, a congressman on Wednesday, April 12, called for his medical debt ceiling to be lowered to his 3%, increased transparency of medical costs, and bills banning debt collection during appeals proceedings. approved. (AP Photo/David Zalubowski, File)

By Jesse Bidein | Associate Press/Report for America

DENVER — Cindy Powers is bankrupt after 19 life-saving abdominal surgeries. Lindsey Vance’s medical bills piled up after she crashed her skateboard and had to get nine stitches on her chin. And in the case of Misty Castaneda, open-heart surgery for an illness she had since birth left her shouldering her $200,000 bill.

According to the Kaiser Family Foundation, these are three of the estimated 100 million Americans who have amassed a collective health debt of roughly $200 billion (roughly the size of Greece’s economy).

At least 12 states and the U.S. Congress are now pushing legislation to reduce the financial burden that keeps many of us in an intolerable situation. Fearing additional debt, he forgoes necessary care, takes out his second mortgage for cancer treatment, and cuts his grocery budget. Keep up with payments.

Some bills create medical debt relief programs and protect personal wealth from collection, while others lower interest rates and prevent medical debt from hurting your credit score. , some call for greater transparency in healthcare spending.

In Colorado, lawmakers on Wednesday approved a bill that would ban debt collection during appeals, requiring the state to lower the maximum interest rate on medical debt to 3% and make treatment costs more transparent.

If it becomes law, Colorado will join Arizona and have the lowest interest rates on medical debt in the nation. There are factions. Colorado Republican Senator Janice Rich said she was concerned the proposal could “limit hospitals’ ability to collect debt and hurt cash flow.”

According to the Consumer Financial Protection Bureau, medical debt is the leading cause of personal bankruptcy for patients, with an estimated $88 billion of that debt collected nationwide. About 530,000 people report going bankrupt each year due to medical bills and time away from work, according to a 2019 study in the American Journal of Public Health.

Powers’ family ended up paying $250,000 for 19 abdominal surgeries that saved his life. They declared him bankrupt in 2009 and the bank foreclosed on their house.

In testifying in February in support of the Colorado bill, Cindy’s husband, James Powers, said, “We just recently started picking up the pieces.”

In Pennsylvania and Arizona, lawmakers are considering medical debt relief programs to use state funds to eradicate residents’ debt. New Jersey’s proposal would use federal funds from the American Relief Plan Act to achieve the same end.

Florida and Massachusetts bills protect personal property, such as cars needed for work, from medical debt collection and force providers to be more transparent about costs. It was unanimously approved by a Senate committee and went to vote in both chambers.

Colorado, New York, New Jersey, Illinois, Massachusetts, and members of the U.S. Congress are considering bills that would prohibit medical debt from being included in consumer reports, thereby protecting debtors’ credit scores. increase.

Born with a congenital heart defect, Castaneda was $200,000 in debt at age 23 and needed surgery. Her debt eroded her credit and forced her to rely on the credit of her emotionally abusive husband.

For more than a decade, Castaneda wanted to end the relationship, but it was nearly impossible as everything was in her husband’s name. She finally divorced her husband in 2017.

“I’ve been trying to catch up for the last 20 years,” said Castaneda, 45, a hairstylist at Grand Junction in Western Slopes, Colorado.

Health care debt is not a strong indicator of people’s creditworthiness, said Isabelle Cruz, director of policy for the Colorado Consumer Health Initiative.

While buying a car beyond your means or overspending on vacation can be partly due to poor decision making, medical debt can grow from unexpected short-term acute care. It often occurs and leaves patients with large bills that exceed their budget.

On both Colorado bills to cap interest rates and remove health care debt from consumer reports, a spokesman for Democratic Gov. I will.”

Neither bill attracted strong political opposition, but a spokesman for the Colorado Hospital Association said the organization would work with sponsors to amend the interest rate bill to “align the law with many of the existing protections.” .

The association has not disclosed details.