Opinion: Forgiving, forgetting medical debt could hurt consumers more than help

Elizabeth New (Hovde) of the Washington Policy Center believes lawmakers need to stop talking about health care as a ‘right’ because health care is a need.

Elizabeth New (Hovde) of the Washington Policy Center believes lawmakers need to stop talking about health care as a ‘right’ because health care is a need

Elizabeth New (Hovde)
Washington Policy Center

Addressing medical debt is all the rage in election season optics. After all, a new poll found that 51% of Americans believe it is extremely or very important that the government help relieve medical debt.

Elizabeth New (Hovde), Washington Policy Center
Elizabeth New (Hovde), Washington Policy Center

The same day that the University of Chicago Harris School of Public Policy/Associated Press-NORC Center for Public Affairs Research poll found that having taxpayers forgive people’s medical debt was more popular than putting taxpayers on the hook for people’s school debt, the Biden administration advanced a plan to remove medical debt from credit scores. (A similar piece of legislation was considered in the Washington state Legislature this past session. House Bill 2119 tried to prohibit garnishment of a person’s earnings for judgments arising from medical debt. The bill died, thankfully, after a public hearing full of concerns.)

The administration also urged state and local governments to buy up medical debt and retire it. That’s happening in places including Connecticut, New Jersey, the city of New Orleans and Cook County, Illinois

Newsweek reports, “Earlier this year, New Jersey announced a $10 million fund to help tackle medical debt in the state. Cook County in Illinois also announced it would purchase up to $1 billion in medical debt owed by its residents and cancel it.

“Both are using funds from the Biden administration’s American Rescue Plan Act of 2021.” (See note below.) 

Want to exacerbate problems in health care? This is a good way. Forgiving medical debt and/or removing it from credit scores will hurt more than help. If paying medical bills is seen as optional, and lack of payment forgiven, watch out for unintended consequences, such as more hospitals and physicians requiring upfront payment before delivering care, more uninsured patients, decreased access to medical care, fewer people paying their medical bills and destabilization of our credit market. 

While no one plans to need medical care that results in high bills, people can and should prioritize emergency savings, paying their bills, working with hospitals and having health insurance. Taxpayers finance generous subsidies for obtaining health insurance. (I acknowledge that many people with medical debts do have insurance.)

Instead of joining the increasingly popular idea of forgiving medical debt — or erasing one’s payment history or the ability to recoup medical bills — the state should continue going after price transparency in health care. Lawmakers should focus on cost containment, which could be improved by resisting even more government regulation, inviting more competition and innovation into our state and providing better Medicaid reimbursement rates to providers. (Protecting Medicaid for the vulnerable should be a priority. It’s not. Instead, the state Legislature is interested in expanding the number of people dependent on taxpayer-provided health care.)

Lawmakers need to stop talking about health care as a “right.” Health care is a need, just as shelter and food are needs. We should all be interested in becoming more informed consumers with a financial stake in the health care game to help contain or lower costs. Forgiving medical debt and hiding damaging information in credit reports is not going to lower costs.

Note: The Newsweek article mentioned in this article, while informative, contained an error that should be noted.

The story says, “According to the U.S. Census Bureau, the majority of Americans (92.1 percent) have private health insurance.” Not so. The referenced Census Bureau report says, “In 2022, 92.1 percent of people, or 304.0 million, had health insurance at some point during the year, representing an increase in the insured rate and number of insured from 2021 (91.7 percent or 300.9 million).” As for who has private or public health coverage, the report says, “In 2022, private health insurance coverage continued to be more prevalent than public coverage, at 65.6 percent and 36.1 percent, respectively.”

I called and sent a correction to Newsweek about the error. I hope to see a fix. After leaving the above comment for Newsweek readers underneath the story, I was told my comment “violates the community guidelines and has been rejected.”

Elizabeth New (Hovde) is a policy analyst and the director of the Centers for Health Care and Workers Rights at the Washington Policy Center. She is a Clark County resident.

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