Testimony of Emily Stewart on the Economic Impact of the Growing Burden of Medical Debt
Community Catalyst Executive Director Emily Stewart’s testimony as prepared for delivery before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on March 29, 2022. This testimony was originally posted on March 29, on Emily’s Medium.com page.
My name is Emily Stewart, I am the executive director of Community Catalyst, a national non profit organization with a mission to build the power of people to create a health system rooted in race equity and health justice and a society where health is a right for all.
remain uninsured and many insured individuals face high deductibles and copayments if illness or injury strikes.
When a person’s medical bills exceed what they can pay, they are saddled with medical debt.
many sources of medical debt, with the largest share arising from emergency room visits, hospitalizations, dental care, and diagnostic tests like x-rays and MRIs. U.S. Census Bureau data estimate that 17 percent of U.S. households held at least $195 billion in medical debt in 2019.
Who has medical debt? To start, the uninsured. More than one-third of people with no insurance have medical debt. Many of them are living in states that have not expanded Medicaid. People in these states also have a greater number of accounts being sent to collection when compared to residents of Medicaid expansion states. Additionally, 22 percent of insured people have outstanding medical bills.
disproportionate effect on people of color, with nearly 27 percent of Black households and just under 19 percent of Latinx families having medical debt. In addition, households with income of less than 133 percent of the federal poverty level are more likely to have problems paying medical bills. Families in households with children are far more likely to have medical debt than those with no children in the household. Families in which a member has a disability are nearly twice as likely to have medical debt as those families in which no family member has a disability.
forced to exhaust their savings to pay for medical bills, and consequently reduce their spending on food, clothing, and other household items, borrow money from friends or family members, or take on additional debts. 37 percent of people with medical debt or billing problems used up all their savings to pay their medical bills, 31 percent took on new credit card debt, and 11 percent took out a mortgage against their home or took out another type of loan to pay their medical bills.
delay needed care to avoid incurring more bills. The implications of this problem were made obvious over the past two years, as we have encouraged people to seek testing and treatment for COVID-19. Living with outstanding medical bills also creates health problems, causing stress that can lead to poor physical and mental health.
How do people hold debt? We know that medical debt comes in various forms: money owed directly to hospitals and providers; bills owed providers that that are being pursued by third-party collection agencies; payments for care that has been charged to credit cards; loans from companies that specialize in financing medical debt; and medical accounts that have been purchased by debt buyers. Unfortunately, we do not know precisely the amount of debt in these different categories.
Several studies have found that one-third of those with credit cards have ongoing credit card debt because of medical bills. Analysis of payment patterns conducted by the JP Morgan Chase Institute illustrates the lingering effects of medical debt. They found that younger families are more likely to take on revolving credit card debt and older adults have elevated levels of credit card debt one year after making a medical payment of $1,500 or more.
often with high interest rates. Other companies claim to partner with hospitals or providers to offer flexible low-interest patient loans. Some issue patients a healthcare payment card to be used at any time for health related expenses.
Who owns medical debt? Who holds the debt can make a huge difference in whether a person’s medical bill problem is alleviated or aggravated. Many hospitals and providers offer extended payment plans, with no interest, directly to their patients. Non-profit hospitals are obligated to provide charity care or financial assistance, but many people are unaware of these programs. The Washington State Office of the Attorney General recently filed lawsuits against two Washington hospitals alleging that employees were trained using scripts that gave patients the impression that they were expected to pay for their care, failing to notify them that they were eligible for financial assistance.
There are many stories we could share; here are two from partner organizations.
Illinois Coalition for Immigrant and Refugee Rights, Mujeres Latinas en Acción, Southwest Suburban Immigrant Project, Mano a Mano Family Resource Center, Legal Council for Health Justice and Enlace Chicago:
New Mexico Center on Law and Poverty, Casa de Salud and Forward Together:
reported that there has been a surge in demand from hospitals for their services and that these companies are very profitable and attractive for investors. This will likely make it even more difficult for patients to negotiate reasonable payment plans directly with their local hospitals and providers.
Is the debt even owed? Medical debt can ruin an individual’s credit rating. Research from the Consumer Financial Protection Bureau (CFPB) found that 58 percent of collection accounts on credit reports are medical bills. These accounts are reported by third-party collection agencies; they often lack accurate or updated information from the original health care provider. While the CFPB estimates that $88 billion in medical collections sit on consumer credit reports, other estimates range from $81 billion to $140 billion.
nearly two-thirds (63%) of complaints assert that either the debt was never owed, not verified as the consumer’s debt, already paid, or discharged in bankruptcy.
What are debt collection practices? Third party collection agencies, acting on behalf of hospitals and other providers, often pursue lawsuits. Legal actions include garnishing wages, putting liens on patients’ homes and bank accounts, and even issuing civil arrest warrants for people who do not comply with repayment terms.
detailed people having their wages garnished or bank accounts frozen. One report found that more than one-quarter of the top 100 hospitals, based on patient revenue, sued patients for medical bills between 2018 and 2020. In New York state, 55 hospitals had sued over 4,000 patients since the pandemic began, including the state’s largest health system, which sued more than 2,500 patients during this time period.
filed thousands of lawsuits against patients struggling to pay their bills.
took legal action, with one West Virginia hospital being responsible for close to 18,000 lawsuits.
medical debt owed to a hospital.
sent to jail.
incident from another Kansas hospital, a women spent six hours in jail, paying a $250 bond, which went toward the judgement obtained for her medical bills. A lawyer then warned that if the judge issued another warrant for her arrest, bond the next time would be set at $500.
she was terrified.
Recommendations
- Extend Medicaid coverage to protect residents of states that have not yet expanded Medicaid.
- Strengthen non-profit hospital Section 501r protections to prohibit wage garnishments and liens on primary residences, require more generous financial assistance and extend protections to include the services of any provider of care in a hospital or health system.
- Extend Section 501r protections to for-profit hospitals and health systems.
- Promote cross-agency collaboration to facilitate patients’ access to insurance coverage and financial assistance programs of health care providers.
- Provide funding to state consumer assistance programs to assist people in identifying coverage and resolving medical debt problems.
- Encourage the Department of Health and Human Services to:
a) Include a requirement in the No Surprises Act (NSA) final rule that providers must screen uninsured patients for public insurance programs and hospital financial assistance in addition to providing good faith estimate of the cost of services.
b) Monitor the NSA implementation to ensure that patients are not billed, nor coerced into paying amounts exceeding those allowed under this law.- Extend protections through funding COVID-19 testing and treatment for uninsured people.
- Establish an ombudsman office within the Consumer Financial Protection Bureau to resolve complaints involving medical collections and credit reporting and require the office to issue annual reports.
- Support the CFPB’s actions to:
a. Hold credit reporting companies accountable for having reasonable procedures in place to assure that medical debt information is accurate and taking action against furnishers who report inaccurate information.
b. Conduct additional research on medical billing collection practices and their impact on patients and families.
c. Determine whether policies should be implemented to eliminate unpaid medical billing data on credit reports altogether.