DENVER – Cindy Powers was bankrupted by 19 life-saving abdominal operations. Medical debt started piling up for Lindsey Vance after she crashed her skateboard and had to get nine stitches in her chin. And for Misty Castaneda, open-heart surgery for a condition she had since birth cost her $200,000 in bills.
They are three of the roughly 100 million Americans who have racked up nearly $200 billion in collective medical debt – almost the size of the Greek economy – according to the Kaiser Family Foundation.
Today, lawmakers in at least a dozen states and the U.S. Congress have pushed legislation to reduce the financial burden that has pushed many people into untenable situations: forgoing needed care for fear of further debt , take out a second mortgage to pay for cancer treatment, or cut grocery budgets to keep up with payments.
Some bills would create medical debt relief programs or protect personal assets from collections, while others would reduce interest rates, prevent medical debt from plummeting credit scores or require more great transparency in the costs of care.
In Colorado, House lawmakers on Wednesday approved a measure that would lower the maximum interest rate for medical debt to 3%, require greater transparency of treatment costs and ban debt collection in a process call.
If this becomes law, Colorado would join Arizona in having one of the lowest medical debt interest rates in the country. North Carolina lawmakers have also begun considering a 5% interest cap.
But there are opponents. Republican Colorado State Senator Janice Rich said she was concerned the proposal would “limit hospitals’ ability to collect debts and hurt their cash flow.”
For patients, medical debt has become a leading cause of personal bankruptcy, with an estimated $88 billion of that debt in collection nationwide, according to the Consumer Financial Protection Bureau. According to a 2019 study by the American Journal of Public Health, approximately 530,000 people reported going bankrupt each year due in part to medical bills and missed work.
Powers’ family ended up owing $250,000 for the 19 life-saving abdominal surgeries. They declared bankruptcy in 2009 and then the bank seized their house.
“It’s only recently that we’ve started to pick up the pieces,” Cindy’s husband, James Powers, said during his February testimony in support of the Colorado bill.
In Pennsylvania and Arizona, lawmakers are considering medical debt relief programs that would use public funds to help eradicate resident debt. A New Jersey proposal would use federal funds from the US Bailout Act to achieve the same goal.
Bills in Florida and Massachusetts would protect certain personal assets — like a car needed for work — from medical debt collections and force providers to be more transparent about costs. The Florida legislation received unanimous approval from House and Senate committees before being passed in both houses.
In Colorado, New York, New Jersey, Illinois, Massachusetts, and U.S. congressional lawmakers are considering bills that would prevent medical debt from being included in consumer reports, thereby protecting consumers’ credit scores. debtors.
Castaneda, who was born with a congenital heart defect, found herself in debt of $200,000 at the age of 23 and had to undergo surgery. The debt caused her credit rating to plummet and, she said, forced her to rely on credit from her emotionally abusive husband.
For more than a decade, Castaneda wanted to end the relationship, but everything they owned was in her husband’s name, making it nearly impossible to break up. She finally divorced her husband in 2017.
“I’ve been trying to catch up for 20 years,” said Castaneda, 45, a hairstylist from Grand Junction on Colorado’s West Slope.
Medical debt is not a strong indicator of people’s creditworthiness, said Isabel Cruz, policy director at the Colorado Consumer Health Initiative.
While buying a car beyond your means or spending too much on vacation can be partly attributed to poor decision-making, medical debt often stems from short-term treatments and acute care that are unexpected. , leaving patients with high bills that exceed their budget.
For Colorado’s two bills — to cap interest rates and remove medical debt from consumer reports — a spokesman for Democratic Gov. Jared Polis said the governor “will review these policies with the goal of saving money.” money on health care”.
Although neither bill met with strong political opposition, a spokesperson for the Colorado Hospital Association said the organization was working with sponsors to amend the interest rate bill.” in order to align the legislation with the multitude of existing protections”.
The association did not provide further details.
For Vance, protecting his credit rating early could have had a major impact. Vance’s medical debt began at age 19 following the skateboarding accident, then worsened when she broke her arm shortly after. Now 39, she could never qualify for a credit card or a car loan. Her in-laws co-signed for her Colorado apartment.
“My credit identity was medical debt,” she said, “and that set the tone for my life.”
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Jesse Bedayn is a member of the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on underreported issues.
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