Lawmakers: Tiny sum can erase medical debt mountain
It seems far-fetched at first: that $4 million could wipe out $400 million in medical debt held by Pennsylvanians who might otherwise be hounded by bill collectors and inclined try to get by without future medical care.
But supporters say it’s entirely plausible and being done increasingly often around the country.
The math works because health systems typically give up on collecting large chucks of unpaid bills, selling them to bill collectors for a fraction of the original amount.
“They buy the medical debt for pennies on the dollar and then they go after not just the full amount, put the full amount plus interest, and people are hounded with these letters and these threats to get that medical debt collected,” says state Rep. Tarik Khan, D-Philadelphia, who is also a nurse practitioner.
Khan is among the supporters of a plan contained in Gov. Josh Shapiro’s proposed budget that would use $4 million in state money to buy up and simply eliminate medical debt of struggling Pennsylvanians.
The state would contract with a nonprofit firm that is already doing so in various places around the country. The firm would scour the bad debt lists of health care providers, looking for unpaid bills from patients earning less than 400% of the federal poverty level or with debt equaling 5% or more of their family income.
There’s been talk of contracting with RIP Medical Debt, a nonprofit that carries out the approach in multiple states.
At an event at the state Capitol, Maggie Lynn of Delaware County described how daily calls from medical bill collectors caused her to feel a “gnawing, constant sense of foreboding and anxiety.”
The 33-year-old medical transcriptionist said she eventually had a severe car crash that put her in danger of losing an arm. She was transferred to a hospital that saved her arm, but also left her worrying about the financial consequences.
She said freedom from such worry “should be a basic human right in a firstworld society with the capacity to provide world-class treatments.”
Supporters say about 1 in 10 Pennsylvanians have medical debt, with about $1.8 billion held by collection agencies as of late 2020. They say nearly 60% of people in medical debt have health insurance.
“These medical debts don’t discriminate. They can hit anyone, and much too often they smother our most vulnerable, particularly women and people of color, and often with that debt reaching over a million dollars,” said state Rep. Bridget Kosierowski, DLackawanna County, a registered nurse.
House Bill 78, which lays out the program, was passed last year with bipartisan support, including every Democrat and 13 Republicans. A companion bill remains unapproved in the state Senate.
Supporters hope that approving the $4 million investment proposed for the 2024-25 state budget will enable the program to quickly began once a final bill is passed. Although they view such an investment as a good start, they expect new spending would have to be approved annually to erode the mountain of debt held by vulnerable Pennsylvanians.
In addition to the anxiety, supporters say large medical debts cause people to avoid medical care, eventually leaving them with worse health and more expensive medical needs, and often leaving them unable to work.
A major force behind House Bill 78 has been state Rep. Arvind Venkat, D-Allegheny, an emergency room physician who has said he’s haunted by the memory of a patient who put off breast cancer treatment because of medical debt and died as a result.