Communities experiencing increased medical debts face additional challenges in housing, education and employment, according to recent findings.
08/23/2023 2:05 P.M.
3 minute read
A recent report from the Urban Institute highlights the financial strains resulting from medical expenses most acutely felt by communities of color and those grappling with economic hardships.
The report finds that communities predominantly comprised of people of color bear a heavier burden of medical debt compared to predominantly white neighborhoods across various regions. Additionally, regions with lower median household incomes experience higher rates of medical debt, compounded by higher uninsured rates.
Even as credit reporting practices undergo changes, nearly half of consumers with medical debt still owe $500 or more, and more than half of consumers in low-income communities owe $500 or more in medical debt. This not only affects immediate financial wellbeing but also has long-lasting consequences for credit scores and economic stability, according to the report.
Moreover, the report reveals that communities grappling with heightened medical debt simultaneously face additional challenges such as housing access, higher rates of disability, and lower educational and employment rates. These conditions exacerbate the health care needs of these communities, according to the Urban Institute.
Researchers suggest expanding health insurance coverage and reducing out-of-pocket expenses could alleviate the risk of medical debt. Additionally, imposing stricter requirements on hospitals to offer financial assistance could help along with reforms to insurance programs.
Legislation addresses issues discussed in the report.
In New York where this study is focused, , the New York Assembly passed the Fair Medical Debt Reporting Act (A6275A) to “amend the public health law and the general business law in relation to prohibiting medical debt from being collected by a consumer reporting agency or included in a consumer report,” before adjourning its legislative session this year, ACA International previously reported.
Under the bill, hospitals, medical providers and ambulance services are prohibited from furnishing any portion of a medical debt to a consumer reporting agency (CRA) and are required to include a provision in any contracts entered with the collection entity for the purchase or collection of medical debt that prohibits the reporting of any portion of such medical debt to a CRA.
It also removes any medical debt that is furnished by a hospital, medical provider or ambulance service.
This bill, awaiting approval by the governor, would enact an expansive prohibition on medical debt credit reporting due to the fact it does not set a dollar amount threshold for medical debts furnished to CRAs, or alternatively, a timeframe for agencies to wait before reporting a debt.
Nationwide, legislation introduced in the Senate targets communications with consumers from health care providers about any medical debt owed as well as transparency on their medical debt practices, ACA previously reported.
The revenue cycle contains a complex set of processes, and any legislation should be well vetted by providers, payors and collection agencies to ensure the overall goals actually get achieved. Too often we’ve seen well-intended legislation reduce access to care for the most vulnerable in our communities by not looking at downstream consequences. Placing focus on the back-end processes has proven damaging to finding true root-cause improvements needed on the front-end that would bring about meaningful change in helping patients and consumers be aware of their health care payment options.
ACA’s advocacy team is actively engaged in educating lawmakers on relevant congressional committees about this proposed law, as well as health care receivables in general, in concert with other trade associations, ACA members who serve the provider community and ACA’s Board Advocacy Committee.
ACA is also focused on solutions involving stakeholders so that well-intended proposals can help patients while considering larger issues in the health care revenue cycle.