Bill would wipe out patient medical debt

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Patient medical debt would be wiped out under a plan pitched by federal lawmakers.

The “Medical Debt Cancellation Act” would create a grant program for the U.S. Department of Health and Human Services (HHS) to pay off hospitals, and later physicians and other health care providers. The legislation was introduced this week by Sen. Bernie Sanders (I-Vermont), Sen. Jeff Merkley (D-Oregon), Rep. Ro Khanna (D-California), and Rep. Rashida Tlaib (D-Michigan). Their joint announcement said their plan would “eliminate all $220 million in medical debt held by millions of Americans, wipe it from credit reports, and drastically limit the accrual of future medical debt.”

“This is the United States of America, the richest country in the history of the world. People in our country should not be going bankrupt because they got cancer and could not afford to pay their medical bills,” Sanders said in the announcement.

“No one in America should face financial ruin because of the outrageous cost of an unexpected medical emergency or a hospital stay,” he said. “The time has come to cancel all medical debt and guarantee health care to all as a human right, not a privilege.”

While federal plans to forgive student loans have been divisive politically, there may be more support for wiping out medical debt. The bill sponsors cited an October 2022 poll by the Medicare Plans Patient Resource Center that found 92% of Americans – including 84% of Republicans – favor medical debt forgiveness.

There have been a number of studies and research on medical debt. While numbers vary, generally research suggests that having health insurance does not necessarily ensure patients get care without a huge financial burden after.

“Patients should be able to get the care they need when facing illness or injury without fear of financial ruin,” Merkley said in the announcement. “America’s medical debt crisis continues to harm millions, and Congress must do all it can to relieve patients of this tremendous burden.”

The legislators cited February 2024 data from the Peterson-KFF Health System Tracker that estimated medical debt has reached at least $220 billion, with approximately 14% of adults owing more than $1,000, and an estimated 3 million people owing more than $10,000.

“Our current health care system is bankrupting Americans,” Khanna said. “I’ve heard heartbreaking stories from constituents who have skipped doctor’s appointments due to cost, who have lost loved ones because they couldn’t afford their medication, and who aren’t able to buy a house or get a job because of crippling medical debt.”

According to the lawmakers, the bill would:

• Amend the “Fair Debt Collection Practices Act,” making it illegal to collect medical debt incurred prior to the bill’s enactment and creating a private right of action for patients.
• Amend the “Fair Consumer Credit Reporting Act,” effectively wiping medical debt from credit reports by preventing credit reporting agencies from reporting information related to debt that arose from medical expenses.
• Create a grant program within the U.S. Department of Health and Human Services to cancel medical debt, prioritizing low-resource providers and vulnerable populations.
• Amend the “Public Health Service Act,” updating billing and debt collection requirements to limit the potential for future debt to be incurred.