Health Care

N.C. Gov presents plan to erase some residents’ hospital medical debt

It requires federal approval, and hospitals must agree to debt forgiveness conditions.
North Carolina Gov. Roy Cooper (D) signs a Medicaid expansion law at the Executive Mansion on Monday, March 27, 2023, in Raleigh, N.C. (AP Photo/Hannah Schoenbaum)

Gov. Roy Cooper (D) announced a plan that could erase hospital medical debts for low- and middle- income residents with bills they can’t afford to pay.

The plan involves increased federal payments to hospitals in exchange for the hospitals forgiving old medical debt and helping patients avoid new debt.

The federal government must approve the plan and hospitals must agree to specific conditions for debt forgiveness.

Nearly half a million people have enrolled in expanded Medicaid since December 1. But the weight of medical debt “still casts a long shadow,” Cooper said at a news conference Monday.

As people sought to enroll, they relayed their experiences of living with medical debt, said Kody Kinsley, state Department of Health and Human Services secretary.

“They’re still struggling with the burden of debt that they had from a cancer diagnosis or procedure that they had just a few years prior,” Kinsley said. “It’s clear that by providing relief for medical debt, we give North Carolinians not just peace of mind but truly a fresh start.”

North Carolina has one of the highest percentages of adults who report having medical debt, according to the Peterson Center on Healthcare and KFF.

Hospitals rarely collect more than 5% of old debts, Kinsley said, while the unpaid bills remain a burden for patients.

A news release outlined what hospitals must do to qualify for increased federal payments under the plan:

  • Wipe out medical debt deemed uncollectible for people not on Medicaid but who have incomes at or below 350% of the federal poverty level dating back to January 2014, or who have debt that’s more than 5% of their annual income.
  • Erase all unpaid medical debt dating back to January 2014 for people enrolled in Medicaid.
  • Provide discounts on medical bills of between 50% and 100% for patients with incomes at or below 300% of the federal poverty level. Three hundred percent of the federal poverty level is an annual income of $93,600 for a family of four.
  • Automatically enroll people into charity care by determining eligibility using streamlined screening.
  • Agree not to sell medical debt held by people with incomes at or below 300% of the federal poverty level to debt collectors.

The plan has the potential to erase $4 billion in medical debt for 2 million people, Cooper said.

However, there may be some limits to the relief in cases where hospitals have sold debt to collection agencies or where people have liens against their homes because of medical debt judgments.

“We won’t be able to go back in time on all things,” Kinsley said.

Medical debt is one of the leading reasons for delaying medical care, said Dave Almeida, government affairs director for the Leukemia and Lymphoma Society.

“No one should have to choose between putting food on the table, paying the rent, putting the kids through college, or engaging in life-saving treatment, yet medical debt is one of the leading causes of personal bankruptcy,” he said.

Cooper’s plan allows patients to focus on their health, Almeida said, “instead of worrying about when debt collectors are going to call again and demand payments.”

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