An Urban Institute study released in mid-July and funded by the New York Health Foundation shows that nearly half of New Yorkers with medical debt owe $500 or more, and that medical debt was highest in four upstate regions: the Mohawk Valley, Southern Tier, Mid-Hudson Valley and the North Country.
The data analysis also shows that debt in collections is also much higher in poor, rural, upstate communities.
One example: Of the medical debt owed by residents of Chemung County in the Southern Tier, 27% is in collections. Other counties with high levels of debt in collections include Steuben, 14%; and Jefferson and St. Lawrence, both 14% and in the North Country.
“Medical debt has been called a uniquely American injustice,” said David Sandman, president and CEO of the New York Health Foundation.
Indeed, medical debt is the number one reason Americans declare personal bankruptcy.
“I don’t know anybody across the political spectrum, no matter what their politics might be, who thinks getting sick, needing health care, should also ruin you and your family, financially,” Sandman told Capital Tonight.
In what Sandman calls “a double whammy,” communities with the highest prevalence of medical debt also confront the greatest health needs with the fewest resources: They have more disabilities, higher rates of diabetes, lower rates of education and they are underemployed.
“We see it all the time. Your health is determined by a lot of things besides just the medical care you get,” Sandman explained.
To protect families in medical debt from bankruptcy, Congress passed the “No Surprises Act” this past spring. The new law prevents surprise medical bills and requires that the national credit reporting companies – Equifax, Experian and TransUnion – remove all paid medical debts from consumer credit reports, as well as all medical collections under $500.
The Urban Institute study cited above shows that most medical debt in New York state exceeds $500. It’s one reason that both chambers of the state Legislature passed a bill this session that prohibits any medical debt from being collected by a consumer reporting agency or included in a consumer debt report.
The bill (S4907a/A6275), called “The Fair Medical Debt Reporting Act,” sponsored by Sen. Gustavo Rivera and Assembly Member Amy Paulin, the Health Committee chairs in each chamber, would also prohibit medical service providers from reporting medical debt directly or indirectly to a consumer reporting agency. The bill awaits the signature of Gov. Kathy Hochul.
According to Sandman, New York state has been at the forefront of helping consumers with medical debt, lowing interest rates, reducing the statute of limitations on medical debt and prohibiting providers from either placing a lien on a home or garnishing wages if medical debt is owed.
“The latest piece of legislation… would get rid of that $500 dollar threshold. It means that no medical debt of any amount would get sent on to a credit reporting agency. It would be the ultimate protection,” Sandman said.
If Hochul signs the legislation into law, New York state would be the second state after Colorado to extend consumer protections against any medical debt, regardless of the dollar amount.