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Finally, Some Good News for People with Medical Debt; But It’s Just the Beginning

Allison Sesso

by Allison Sesso, President & CEO Undue Medical Debt

Medical debt is pervasive, affecting millions with deep consequences to their lives and families. With estimates as high as $195 billion in medical debt hanging over Americans heads, it is woven into our health care financing system and our economy. Though medical debt affects all people, it does not affect people equally. Studies show that people living in the South, living in rural communities, low-income people and Black and brown people are more likely to have medical debt. It is clearly documented that medical debt is a remnant of redlining and other longstanding barriers to wealth and good health. The root causes of medical debt point to an affordability crisis in this country, leaving many people under-insured or rather, having health insurance but being unable to afford the high deductibles or access care because of the very limited number of doctors in network.

According to The Commonwealth Fund, workers are increasingly paying more than 10 percent of their income toward premiums, deductibles and cost sharing. When people direct so much income to pay for the possibility of a health issue, there are fewer dollars left to pay for food, transportation or rent. As such, people face the inevitable — health events happen and bills keep coming, leaving millions of people emotional anguished, with crushed credit scores and more likely to skip the care they need to be healthy.

Thankfully, medical debt has officially caught the attention of policy makers and there is some light peeking through the cracks as both the private and government sectors are taking steps to mitigate the medical debt crisis. Earlier this spring, the largest three credit agencies announced that they will remove paid medical debt from credit reports and discontinue reporting medical debt under $500. These changes are welcome but fail to address unpaid debts over $500 of which there are many. The Biden Administration grabbed the baton recently to take further action. The Vice President announced a focused commitment to mitigating medical debt and operationalizing President’s recent Executive Order on health care affordability. The Administration will streamline the process for canceling medical debt for Veterans; a long-overlooked area of medical debt that hangs over the people who need our gratitude and caregiving most. Second, under Secretary Becerra’s leadership, Health and Human Services will ensure patients do not receive bills inaccurately, focusing specifically on hospital collection and billing practices with an eye toward maximizing access to financial assistance.

While many hospitals work hard to provide charity care, we know far too many people do not receive the financial assistance for which they are eligible and strengthening these systems is paramount. Finally, the Consumer Financial Protection Bureau will limit debt collection actions that we know are harmful to people and are ruinous to people’s economic stability. This recognition that medical debt is a bad predictor of creditworthiness is significant. The CFPB will lead an effort to better inform consumers of their rights as it relates to medical debt.

These changes are exciting for us at Undue Medical Debt and all the people we seek to help; the announcement is the culmination of hard work and outreach by a broad spectrum of stakeholders, especially those who have bravely shared their struggles with medical debt. If ending medical debt is a marathon, we are now finding our stride in the first leg of the race. Addressing medical debt will require a focused effort on ensuring equitable access to affordable coverage and provider financial assistance programs. Medical debt is not the same as other debts. It is not a debt of choice but a debt of necessity. The more we embrace this idea, the closer we will be to ending its prevalence.

Allison Sesso