Attorney General Phil Weiser this week joined state legislators and consumer health advocates at the State Capitol in support of Senate Bill 23-093, legislation that would provide Coloradans with additional consumer protections from high interest rates for medical debt and confusing debt collection practices that lead to long-lasting debt and financial instability.
Debt incurred from medical costs can be financially devastating for patients. When combined with high interest rates and complicated collections practices, consumers may never be able to pay off their medical debt. According to a 2022 report from the federal Consumer Financial Protection Bureau, Coloradans overall held more than $1.3 billion in medical debt and over 12% of Coloradans have medical debt in collections.
For Coloradans who reported problems paying off medical debt, a survey by the Colorado Health Institute found that 46.2% of such individuals accumulated credit card debt for medical expenses, 37.2% were unable to pay for necessities like food, heat, or rent, 15.7% took out a loan, and 5.4% declared bankruptcy. And national data from the U.S. Census Bureau shows that communities of color, younger households with children, veterans, and those without a college degree are more likely to be burdened by medical debt.
Reflecting his commitment to addressing this issue, Weiser recently took action against Flatirons, a Colorado-based medical billing company, for sending deceptive billing notices on behalf of surgical assistants who were not covered by patients’ insurance. Weiser said Colorado has made a number of improvements to better protect patients in health care transactions and medical debt collection, but that SB23-093 is needed to more fully address the significant challenges associated with medical debt.
“Consumers are often surprised by the costs of health care services and incur medical debt as a result. It’s important we create protections and ensure that health care providers and debt collectors operate fairly and responsibly. The negative impact on consumers is felt for years, creating trauma, and often leading to a painful cycle of debt. We will remain focused on this issue and continue to stand up for and protect consumers,” Weiser stated.
The legislation establishes new protections for Colorado consumers burdened with medical debt by:
- Capping the medical debt interest rate at 3% to keep debt from spiraling to levels where a patient is unable to pay off.
- Pausing collections on medical debt as patients appeal their coverage and prohibiting reporting the debt to a consumer reporting agency until a certain amount of time after an individual fails to fulfill the terms of a payment plan.
- Requiring medical debt creditors or debt collectors to verify total debt owed upon request by a patient and to provide a copy of a payment plan, thereby helping consumers know just how much to properly budget for debt payments.
- Requiring a health-care provider or health-care facility to provide, upon request, an estimate of the total cost of medical services to a person who intends to self-pay for the service, helping these consumers better aware of upfront the cost of services.
- Reinstating the attorney general’s authority to protect consumers from deceptive trade practices related to billing practices, surprise billing, and balance billing whether they seek in or out-of-network care.
State Sen. Lisa Cutter, a prime sponsor of SB23-093 said: “Medical debt is crushing hardworking Colorado families and limiting their ability to live the American Dream. Folks dealing with illnesses or injuries should be focused on getting better instead of worrying about how their treatment will affect their credit score. Our new legislation creates critical new consumer protections that will put a cap on interest rates, improve accountability for providers and debt collectors, and prevent thousands of Coloradans from falling into a tangled web of medical debt.”
“Every day, Coloradans are forced to choose between paying for necessities like food, heat, or rent and life-saving medical care,” said state Sen. Sonya Jaquez Lewis. “Increasing transparency, capping interest rates, and cracking down on deceptive trade practices will be a game changer for patients seeking life-saving health care. I’m so proud to sponsor Senate Bill 93 and fight on behalf of the people of Colorado to bring down health care costs and ease the burden for those facing medically-incurred debt.”
Organizations at today’s news conference supporting SB23-093 include the Colorado Consumer Health Initiative, The Bell Policy Center, CoPIRG, and Towards Justice.
“We often see cases where a consumer receives a medical bill with unexpected high out-of-pocket costs, they can’t pay it, it goes to collections and their already unaffordable bill grows substantially because of high interest rates. SB23-093 is an important step in addressing pressing medical debt issues that disproportionately impact consumers with the biggest barriers to accessing and affording care,” said Isabel Cruz, CCHI’s policy manager. “We look forward to continuing our work with the attorney general, legislators, and partners to ensure that Coloradans can access necessary medical care without having to worry about financial ruin while we address the root causes of the high cost of care.”
The bill is scheduled for a hearing on Thursday, February 23 at 1:30pm in the Senate Health and Human Services Committee.