Photo: Lindsey Vance and her daughter, Allie, pose for a portrait at their home in Denver on March 10, 2024. Vance is now both insured and in a better situation financially after experiencing medical debt for most of her adult life. (Chloe Anderson for Colorado Newsline)
This story by Sara Wilson appeared on Colorado Newsline on March 11, 2024. We are sharing it in two parts.
Nationwide, about 100 million people have some form of health care debt, according to research by KFF Health News. At the same time, a growing number of states are exploring ways to help patients. A trailblazing credit reporting law, House Bill 23-1126, was one of two medical debt bills passed during Colorado’s 2023 legislative session. It requires credit reporting agencies to remove the debt from consumer reports, limiting who can see it.
Since that 2023 laws went into effect less than a year ago, it is difficult to gauge the impact they have had on patients’ ability to manage medical debt costs. It’s something experts are keeping tabs on. And medical debt protections are often a Band-Aid for “out of control” health care prices, Kona said.
“To really tamp it down, you’d have to take pretty serious action, such as regulating provider prices, and that stuff is politically really hard to do,” she said. “So then people are turning to an idea that if they can’t control that, what are ways they can at least protect consumers in another way?”
Still, advocates say the efforts last year are major wins.
“Those bills (last year) were really aimed towards minimizing the impact of medical debt. So it doesn’t necessarily prevent the bills that people face, but it is trying to address some of the after effects that add insult to injury from those bills,” Fox said.
“That means that they have more financial flexibility and, ultimately, that’s going to be important for them for their own financial stability, but also in their ability to potentially even pay those medical bills,” he said.
Another crucial point in Colorado’s medical debt conversation is the Hospital Discounted Care program. It requires all hospitals to screen uninsured patients for the program and allows patients to apply for financial assistance if they are at or below 250% of the federal poverty level. That is about $75,000 for a family of four.
The program limits a bill amount to the greater of the Medicare or Medicaid rate for the procedure and limits patient payment plans to 6% of their monthly income for three years.
“Prior to hospital discounted care, hospitals were really committed to providing charity care to patients,” said Adeline Ewing, a policy analyst at the Colorado Hospital Association. “Every hospital has their internal financial assistance policy. The intent of hospital discounted care was to come in and standardize that, to make sure we have one program that is working across the state.”
From September 2022 to June 2023, more than 200,000 Coloradans received financial assistance through the discounted care program, according to an annual report from the Colorado Department of Health Care Policy and Financing.
This year, lawmakers are trying to update the discounted care program to ease an unintentional administrative burden on hospitals and create some exceptions to the discounted care requirement for rural primary care clinics that already offer a sliding fee scale. It would also clarify that only Colorado residents are eligible.
This year’s bill would also make hospitals presumptive eligibility sites for Medicaid. That means a hospital could quickly screen a patient for Medicaid eligibility — such as by comparing their income to the federal poverty level or verifying enrollment in other needs-based programs like the Supplemental Nutrition Assistance Program — and have their immediate care covered before that Medicaid application is formally approved. It would cover the cost of that visit and, if the patient then gets on Medicaid, help prevent medical debt in the future, since the patient would have some level of insurance.
Ewing said that Colorado has six hospitals that currently operate as presumptive eligibility sites for pregnant people and children.
“There’s a subset of the population that’s uninsured but eligible, and it is a challenge trying to connect with them and get them enrolled in care coverage. And so hospitals as a touch point have a great opportunity to help get those folks,” Ewing said.
The bill passed its first Senate committee hearing at the end of February but has not yet been scheduled for floor debate. It is supported by the Colorado Hospital Association, the Colorado Consumer Health Initiative and the Colorado Center on Law and Policy.
Fox said CCHI is keeping a close watch on the bill and any amendments that might erode the protections in the discounted care program. Policies that put more responsibility on hospitals and institutions to screen patients for benefits can be the most effective ones when it comes to medical debt mitigation, Kona said.
“Any policies that remove the onus from patients to prove things, show things, be informed of things, be knowledgeable about the various paperwork and all the stuff involved — moving that onus from them to larger entities like hospitals, who could have the resources to keep up with the changing laws and requirements, is helpful,” she said.
Presumptive eligibility, she said “definitely takes a lot of pressure off of patients in a time when they’re already stressed to produce all this documentation.”
Not all attempts at medical debt protection have been successful in Colorado. In 2019, a bill to prevent medical debt-related liens on a person’s house was killed in committee. That’s still an “area of concern,” Fox said.
While Colorado as a state has made progress on limiting the effect of medical debt, two Denver City Council members floated a more direct solution during last year’s city budget process: buying people’s medical debt outright.
Council members Sarah Parady and Shontel Lewis planned to put forth a plan to work with the nonprofit RIP Medical Debt to spend about $3 million in remaining American Rescue Plan Act dollars to eradicate about $300 million of debt in the hands of private lenders.
RIP Medical Debt, a New York-based nonprofit, reports that it has relieved over $10 billion in medical debt for over 7 million families by buying bundles of delinquent hospital bills.
“Medical debt forgiveness is just like an incredibly powerful economic stimulus tool, and it goes right to the people who need it the most,” Parady said, adding that the population of people in medical debt has “a higher proportion of folks with disabilities, Black people, et cetera. In terms of medical debt in collections, those same groups are overrepresented.”
Parady and Lewis did not end up presenting a budget amendment for the idea, but they may bring it up again when it is time to allocate ARPA dollars, potentially by the end of this year.
“My colleagues and I are still keeping our eye on the city’s obligation of ARPA funds and our plans with all that money. If we get to the point where we’re at risk of losing any money and having to give it back to the federal government if it’s not under obligation, I think this would be a really exceptional way to make sure that we keep the money in Denver, because it can go under contract very quickly with RIP Medical Debt.”
This and similar policy responses to medical debt have the potential to benefit thousands of residents across the state.
At the Capitol last year, Lindsey Vance testified at both the House and Senate committee hearings for the credit reporting law, lending a voice for Coloradans struggling to come out on top of their medical debt.
“Despite my best efforts to make any sort of payment, it always came down to having to choose between paying down my medical debt and paying necessities like rent and utilities. This was my reality for many years,” she told lawmakers, adding that instead of feeling frustrated or angry, she has settled into a sadness over it.
“Medical debt has completely controlled just about every aspect of my life and prevented me from living a life that I deserve to have.”
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