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Let's Continue the Momentum to Cancel Medical Debt

At some point, we all get sick and need medical care. In the US, a car accident, surgery, or chronic illness can leave people with hundreds or thousands of dollars in medical bills. No one should have to go into debt for necessary medical care, but when people can’t pay their medical bills, that’s what happens. And it has serious consequences.


People with medical debt are more likely to forgo or postpone needed care, which can lead to worse health over time. Medical debt can also be a serious financial burden; it has become a leading cause of personal bankruptcy. When people can’t pay their medical bill, the hospital or medical provider can sell the debt to a collection agency to recover the unpaid amount. This can hurt people’s credit score, which makes it more difficult for people to rent an apartment, find a job, or secure a loan to buy a car or a home.



image of a black woman with her hands on her face

Roughly 60% of adults with medical debt reported reducing their spending on necessities, like groceries and clothing. People with medical debt may delay payments on other bills or decisions to invest in a home or their education. Research shows that financial hardship can cause toxic stress and negatively impact children’s growth and development and parents’ mental health.


On the other hand, when people get financial relief, it makes a difference. When researchers analyzed a healthcare financial assistance program for patients with low wages at Kaiser Permanente hospitals in Northern California, they saw “an immediate and sharp increase” in doctor visits once patients’ medical debts were forgiven. This led to an increase in diagnoses for heart disease and diabetes and a significant boost in prescription refills for diabetes, depression, and high cholesterol.


The takeaway from Stanford economics professor Neale Mahoney was this: “This research tells us that, if you relieve some of the financial burden from low-income people with medical debt, you see really large increases in health care use and care that is of high value. All of this is really important for improving health outcomes.” Policies that provide financial relief can also improve family economic stability and the health and well-being of children, adults, and families.


This is why cities, counties, and states are implementing policy solutions to address medical debt. In Cook County, Illinois, lawmakers spent $12 million in federal pandemic funds to wipe out $1 billion in medical debt. More recently, state lawmakers in New Jersey included $10 million in the state budget to cancel an estimated $1 billion in medical debt for residents in the state. The city of Toledo and Lucas County allocated $800,000 each (a total of $1.6 million) to forgive up to $240 million in medical debt for residents in Lucas County.


Momentum continues to grow to alleviate the burden of medical debt. Akron, Cleveland, and Pittsburgh all passed legislation this year to forgive medical debt.


Last week, Columbus city leaders announced a partnership with the Central Ohio Hospital Council to forgive $335 million in medical debt for thousands of eligible Columbus residents. The deal will provide debt relief to Columbus-eligible residents with outstanding medical bills between 2015 and 2020 from Mount Carmel Health System, Nationwide Children’s Hospital, The Ohio State Wexner Medical Center, and OhioHealth. To be eligible, Columbus residents would have had to receive care during that timeframe at one of the four hospitals and have an income between 200% and 400% of the federal poverty level, or between $55,000 and $111,000 for a family of four. Residents with income at or below 138% of the federal poverty level are eligible for healthcare coverage through Medicaid, and Central Ohio hospitals offer charity care for individuals below 200% of the federal poverty level who are not enrolled in Medicaid.


Earlier this year, lawmakers in the city of Barberton, a suburb of Akron, OH, passed legislation to use $110,000 in American Rescue Plan Act (ARPA) funds to forgive over $10 million in medical debt for an estimated 4,000 residents. This highlights that smaller municipalities can also take action to provide medical debt relief for their residents.


Our estimates show that thousands of people in Bexley, Gahanna, Grove City, Hilliard, Reynoldsburg, Westerville, Whitehall, and Worthington would be eligible for medical debt relief. At Rise Together Innovation Institute, we stand ready to work with local leaders who are interested in pursuing a similar strategy to cancel medical debt.


Thousands more residents in Franklin County would benefit from medical debt relief

City or County

Estimated number of residents with medical debt who would be eligible for relief

Bexley

980

Gahanna

4,520

Grove City

5,685

Hilliard

3,132

Reynoldsburg

5,681

Westerville

3,684

Whitehall

2,940

Worthington

999

Franklin County

154,582

Source: Estimates are based on the U.S. Census Bureau. (2021). 2017-2021 American Community Survey 5-year Public Use Microdata Samples. Retrieved from https://data.census.gov/table/ACSST5Y2021.S1701?q=hilliard+ohio+poverty; and the Kaiser Family Foundation survey, which highlights that 41% of adults report having debt due to medical or dental bills. Note: For the estimate, we used the estimated number of residents between 200% and 400% of the poverty level (eligible residents) and multiplied it by 0.41.

Medical debt relief can provide meaningful relief for those struggling under the weight of unpaid healthcare bills. It can improve financial stability, increase utilization of critical healthcare services, and even lead to better health outcomes. I’m hopeful that more local and state leaders will join the movement to cancel medical debt.


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It is important to acknowledge that this strategy doesn’t directly affect our neighbors with lower incomes – people with income below 200% of the federal poverty level (below $55,000 for a family of four). Together, we must commit to long-term policy solutions that support the health, security, and stability for this population, too.


Finally, while medical debt forgiveness can provide immediate relief for many residents, it’s not a long-term solution to the systemic issues that lead to medical debt in the first place. Most high-income countries provide universal health coverage for their citizens. In Germany, they’ve designed their healthcare system so Germans don’t go into debt for necessary medical care and they don’t have to worry about things like the price of insulin. Elected leaders at the state and federal level will need to fundamentally transform our healthcare system if we want to ensure that no one has to worry about their financial stability due to a medical issue.


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