Federal Action is Critical to Protect Consumers from Medical Debt
As Congress presses ahead on crafting its COVID-19 relief package, one of the issues they should address is the growing problem of medical debt. Medical debt is one of the leading causes of personal bankruptcy and has caused irreparable harm in many communities. Fear of accruing debt has also driven individuals to forgo needed medical care, potentially causing detrimental impacts to their health. One in six Americans have medical debt that affects their credit report, which amounts to $81 billion dollars of medical debt across the country. Congress must act to provide immediate relief from medical debt and work with health entities to create an inclusive system of change, as this problem is being exacerbated by the COVID-19 pandemic.
In a new policy brief, Community Catalyst recommends consumer-friendly policies to prevent further financial harm during public health emergencies, create transparency from health care providers, and work towards racial justice.
Medical debt forces families to make difficult decisions in their finances, such as how to keep food on the tables and afford rent payments. To collect on unaffordable bills, many hospitals have used aggressive debt collection practices such as garnishing wages and seizing bank accounts. For Darcel Richardson from Baltimore, paying rent became impossible after seeing more than $400 taken directly from her biweekly paycheck for an unpaid medical bill, just as the COVID-19 pandemic began surfacing. Studies have revealed that these callous practices have caused disproportionate harm to Black communities, with nearly one in three Black Americans ages 18 to 64 having past-due medical bills and experiencing more frequent debt collection. Meanwhile, the COVID-19 pandemic has wreaked havoc across the country, causing as many as 30 million Americans to lose their jobs and at least 14 million of them to lose employer-sponsored health insurance. The pandemic has revealed the longstanding racial inequities that contribute to worsened health outcomes; Black and Latinx communities are faced with higher COVID-19 confirmed cases and higher death rates. While Federal stimulus checks have barely been able to supplement rent costs for many, some have seen these funds seized by debt collectors.
Three Key Principles for Congress to Address Medical Debt
Our report, Protect Consumers from Medical Debt, outlines recommendations to the Biden-Harris administration for crafting consumer-friendly policies to prevent further financial harm from medical debt in these harrowing economic times. Below are three key principles Congress must consider: Suspend Medical Debt Collection During Public Health Emergencies; Implement Consumer Friendly Billing Practices; and Mandate Hospitals to Make Disaggregated Data on Medical Billing and Collections Publicly Available.
Suspend Medical Debt Collection During Public Health Emergencies: During this pandemic, worry about incurring testing and treatment bills have deterred many from seeking care; these charges should be ceased during a public health crisis. Medical debt collections should be suspended during public health emergencies and at least 60 days immediately after without accrual of fees or interest. Health care providers should be mandated to work with consumers on forbearance and repayment options.
Implement Consumer Friendly Billing Practices: Congress must address aggressive medical debt collection and alleviate the fear of seeking health care that may be unaffordable. Mandates must be in place to work with patients on determining eligibility for financial assistance and navigating financial assistance policies before invoking extraordinary collection actions. We urge health care providers to work with their communities through meaningful community and consumer engagement.
Mandate Hospitals to Make Disaggregated Data on Medical Billing and Collections Publicly Available: Aggressive debt collection in communities of color perpetuates systemic oppression by keeping credit scores down and deterring them from seeking health care. Publicly available disaggregated data by race and ethnicity should be mandated to create transparency on how certain communities are disproportionally affected by medical debt and the extraordinary collection actions that may result.
What are some ways we can make a difference?
It is more important than ever to address the growing burden of medical debt. COVID-19 has caused deep wounds to our economy, exacerbated health outcomes, and left millions without health coverage. Although we are hopeful that vaccines will bring back a state of normalcy, the aftermath of the pandemic will leave many struggling to pay off medical bills and vulnerable to aggressive collection efforts. Below are some ways to get involved.
- Leverage your voice and share your stories among your community. Have you encountered improper billing or experienced aggressive collection efforts? Your story may encourage others to share how they have been affected and collectively put pressure on local and hospital leadership to create systems of change.
- Convene your community to discuss the need for equitable and transparent billing practices. Create recommendations and speak with your local legislators and members of Congress to let them know how medical debt has affected you and your community. Emphasize the importance of addressing the consequences of medical debt that have only worsened during the pandemic.
- Review and share these Community Catalyst resources for developing financial assistance policies that build trusting partnerships and diminish harm:
- Protect Consumers from Medical Debt – See our recommendations for the Biden-Harris administration to work with Congress to address medical debt.
- Hospital Community Benefit Dashboard: Advancing Health Equity & Community Engagement – This dashboard is a tool for community organizations and hospitals to identify opportunities to address health injustice through five principles of hospital community benefit programs.
- Our Principles and Approaches to Consumer Engagement – Health entities should be engaging in meaningful dialogue with the communities they serve. We frame community and consumer engagement around four principles.