Medical debt affects millions in North Carolina. Will state lawmakers approve protections?
It should be much harder for hospitals to go after people to collect on medical debt, especially since hospitals already make billions of dollars by deducting those losses from their taxes, state political leaders said Wednesday.
Hospitals need to "stop breaking people's kneecaps, putting liens on their homes, garnishing people's North Carolina income tax refunds,” state Treasurer Dale Folwell, a Republican, told a state Senate committee Wednesday.
Sen. Joyce Krawiec, a Forsyth County Republican, worked with Folwell to write Senate Bill 321 — which would enact multiple pro-patient rules that would add new legal protections for people both before and after a hospital puts them into collections for unpaid medical debt.
Krawiec said that for many people — including her own husband — hospitals will send them into collections for debt they don’t actually owe.
A Senate committee plans to vote on the bill Thursday.
“It establishes a set of steps” that hospitals would have to take before sending someone to collections, Krawiec said, like checking to see if the person qualifies for any financial assistance. It also strengthens the appeals process and gives people at least a year to pay a medical bill before it hurts their credit score, she said, and shields people from being held liable for a family member’s medical or nursing home debts.
Republicans aren’t always associated with consumer protection bills that could also be framed as anti-business. Sen. Julie Mayfield, an Asheville Democrat, praised Krawiec, Folwell and other Republicans for taking up this fight.
“It’s amazing, and unconscionable, that the system we have exists,” Mayfield said. “And so I just really appreciate you all bearing down and getting to the right place to protect all of us, and particularly the folks in our communities who are most vulnerable.”
Folwell said the bipartisan support for the bill is reflected among the general public, too. In Arizona last year, voters gave roughly 70% support to a similar proposal on the ballot there.
“This is not a Republican or a Democratic issue,” he said in an interview after the hearing. “This is a moral issue.”
North Carolina has among the worst problems with unpaid debt of any state in the country, according to a 2022 study by The Urban Institute — largely because of North Carolina's failure over the last decade to pass Medicaid expansion, unlike most other states. After that study was published North Carolina did tentatively approve Medicaid expansion, although it has yet to go into effect.
In most of the state’s 100 counties, the study found, over 20% of the population is in collections due to medical debt. In many rural areas, particularly in eastern North Carolina, it’s over 30% of the population who are in collections.
Three of the nation's 10 counties with the highest rates of people being sent to collections for medical debt are in North Carolina, that study found. Greene County had the second-highest rate in the country, with 46% of the population in medical debt collections. Kinston's Lenoir County was right behind it. Anson County outside of Charlotte was also in the top 10, with 42% of its population in collections.
Hospitals oppose the bill
The state’s main hospital lobbying group, the North Carolina Health Care Association, opposes the bill. It's both unnecessary and overly burdensome on hospitals, the group's spokeswoman wrote in an email Wednesday.
To address this problem in a more meaningful way, NCHA spokeswoman Cynthia Charles said, the state legislature should look to insurance — not hospitals.
Many people who go into debt for their health care coverage, she said, struggle to pay their bills because they're either uninsured or, if they do have insurance, have to pay high deductibles before their insurance kicks in.
"Insurance companies should actively work on improving plan designs and coverage to help provide medical debt solutions for their customers," she said. "The North Carolina Healthcare Association and our members would be glad to work with them on that."
The hospital lobby is influential in state politics. And in various other recent health care debates at the state legislature, GOP leaders in the House have tended to be more pro-hospital than GOP leaders in the Senate. Folwell acknowledged that this won’t be an easy fight even if the bill does pass the Senate.
“They have spent 40 years building up their power,” he said.
A similar bill on medical debt protections came up in the legislature last year, also pushed by Folwell. At the time, the association said many hospitals already work hard to help patients get financial assistance on paying their bills.
The bill last year failed to pass. But he said that experience, which at least highlighted the issue, might make this new push more likely to pass now.
“Sadly, all the members of the House and Senate are hearing from their constituents about the negative impact of medical billing,” Folwell said, adding: “When you’re on the other end of a phone call with a widow or a widower who lost their spouse unexpectedly, and then they see their credit rating is destroyed because of medical bills associated with the person who’s no longer with them … When you hear the stories that are happening, that’s why I think this bill has widespread support.”
Charles, however, said there are already state and federal rules in place to protect people. Hospital leaders believe any more rules would lead to too much bureaucracy and over-regulation.
"There are existing federal regulations that protect patients from aggressive debt collection that hospitals already follow," she said. "The state also passed legislation in 2013 that included boundaries or guardrails to protect consumers."
