[Senate Hearing 117-759]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-759


                ECONOMIC IMPACT OF THE GROWING BURDEN 
                            OF MEDICAL DEBT

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                                   ON

   EXAMINING HOW WE CAN PROTECT AMERICANS FROM THE GROWING BURDEN OF 
               MEDICAL DEBT AND DEBT COLLECTOR HARASSMENT

                               __________

                             MARCH 29, 2022

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                


                Available at: https: //www.govinfo.gov /

                              __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
53-817 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------     

            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL G. WARNOCK, Georgia          KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                       Elisha Tuku, Chief Counsel

                 Dan Sullivan, Republican Chief Counsel

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                        Pat Lally, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                        TUESDAY, MARCH 29, 2022

                                                                   Page
Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    27

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     3
        Prepared statement.......................................    28

                               WITNESSES

Robyn M. King, of Ohio...........................................     6
    Prepared statement...........................................    29
Emily Stewart, Executive Director, Community Catalyst............     7
    Prepared statement...........................................    31
Benedic N. Ippolito, Senior Fellow, American Enterprise Institute     9
    Prepared statement...........................................    36
David A. Hyman, Scott K. Ginsburg Professor of Health Law & 
  Policy, Georgetown University Law Center.......................    11
    Prepared statement...........................................    47
Berneta L. Haynes, Staff Attorney, National Consumer Law Center..    12
    Prepared statement...........................................    49
    Responses to written questions of:
        Senator Menendez.........................................    93

              Additional Material Supplied for the Record

Statement submitted by Mindy Hedges..............................   100
Statement submitted by Penelope Wingard..........................   107
Statement submitted by Sloane Wesloh.............................   109

                                 (iii)

 
         ECONOMIC IMPACT OF THE GROWING BURDEN OF MEDICAL DEBT

                              ----------                              


                        TUESDAY, MARCH 29, 2022

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., via Webex and in room 538, 
Dirksen Senate Office Building, Hon. Sherrod Brown, Chairman of 
the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Senate Committee on Banking, Housing, 
and Urban Affairs will come to order. Today's hearing is a 
hybrid format. Our witnesses will testify in person. Thanks to 
all five of you for making the effort to be here. Some of you 
came as far as from Cleveland, so thank you for that. The 
Members will participate, some in person, some virtually.
    Think about watching a loved one rushed to the hospital in 
an ambulance, or learning you have a chronic disease that is 
going to require years of care and monitoring. These kinds of 
medical ordeals are some of the scariest moments in a family's 
life.
    They can happen at any time, to anyone, without warning. 
Suddenly you are coordinating doctor's visits and calls with 
insurance companies. You are nervously checking your savings 
account. You are spending hours on interminable phone calls 
trying to get answers. And you are dealing with it all while 
worrying whether your husband or your mother or your child will 
make it out of the hospital, or whether their health problems 
will continue.
    As the cost of prescription drugs rise, hospital bills 
skyrocket, and debt collectors start calling, families are 
forced to figure out how to make ends meet, instead of focusing 
on their health.
    Families all over the country are telling us that.
    We heard from Penelope Wingard, an after-school teacher 
from North Carolina, who lost her health coverage while 
battling breast cancer. When her medical bills began to pile 
up, her doctors eventually stopped seeing her. Soon after, Ms. 
Wingard had an aneurysm, in addition to vision loss, both of 
which required surgery. Because of the financial situation 
caused by her cancer diagnosis, Ms. Wingard was forced to wait 
and then seek care from a limited list of providers who were 
allowing sliding scale payments.
    Debt collectors call her--they harass her--every single 
day. And now her credit is ruined because of her health.
    Right now, Ms. Wingard needs additional testing to ensure 
her cancer has not returned, which has added an additional 
$2,000 to her debt. So instead of focusing on battling her 
illness, she has to figure out how to handle the debt 
collectors.
    And Ms. Wingard is far from alone. In the United States, 43 
million Americans hold $88 billion dollars of medical debt on 
their credit reports, and this problem is growing. It can 
happen to anyone. Low-income families, Black and Hispanic 
households, veterans, young adults, and older Americans are hit 
particularly hard.
    And debt collectors make this already exhausting experience 
worse. They call over and over, they make threats, and they 
even contact patients' employers.
    Take, for example, Mindy Hedges, from Delaware County, 
Ohio. She has had type 1 diabetes since she was five. For most 
of her adult life, until the passage of the Affordable Care 
Act, she was unable to get health insurance because she had a 
preexisting condition.
    After losing her business in the 2008 recession, her 
medical bills piled up, and she was unable to repay them. That 
is when the debt collectors started calling. And calling. And 
calling. And calling.
    Ms. Hedges did her best. She tried to negotiate. She even 
begged for relief. But the harassment continued. At one point, 
she was even afraid to leave her house.
    This harassment is part of the business model.
    A counselor at a medical debt collection agency owned by a 
private equity firm had some choice words about harassing 
patients. They said they found the first 20 to 30 calls to be, 
quote, ``highly effective.''
    If the calls do not work debt collectors often move on to 
even more aggressive tactics like litigation, forcing people to 
go through lengthy, expensive, and emotionally draining court 
proceedings, often while still battling cancer or grieving a 
loved one.
    For patients, litigation can result in garnished wages or 
property liens. We even see people thrown in jail because they 
could not afford to pay. It is the return of debtor's prison. 
People in the United States of America today are in jail, right 
now, because of medical debt.
    And of course, whenever we find suffering, Wall Street 
finds opportunity. Private equity firms are making inroads in 
the medical debt collection market. Between 2015 and 2016, one-
third of all debt collection agency acquisitions were bought by 
private equity. Those firms exist purely to maximize investor 
profit, no matter the cost to society.
    Maybe that is why private equity-owned debt collection 
agencies are responsible for an outsized number of consumer 
complaints, many concerning attempts to collect debt from 
people who do not owe them.
    We must address the growing crisis of medical debt 
burdening American families.
    President Biden and his Administration are working to 
remove barriers to medical debt forgiveness for veterans, and 
to make it easier and cheaper for them to get care. No one who 
served this country should be saddled with debt for illness or 
injuries incurred in the line of duty.
    And the Biden administration has wasted no time in 
implementing the No Surprises Act, which took effect on January 
1st. This bipartisan law finally bans surprise medical bills. 
One way to prevent debt collector harassment is to protect 
people from debt in the first place.
    The CFPB is also doing important work exposing the abuses 
Americans face while just trying to get health care. And after 
increasing scrutiny and pressure, the three credit reporting 
bureaus--Equifax, Experian, and TransUnion--all announced they 
would significantly change how medical collection debt is 
reported. These changes are expected to remove nearly 70 
percent of medical debt in collections from credit reports. 
This is a positive first step, but just a step.
    And this first step gets to a basic step that we too often 
ignore: medical debt does not correlate with credit risk. It 
correlates with illness.
    It should be obvious--anyone can get sick. Anyone can get 
in a car accident. It has nothing to do with your ability to 
pay your bills--or at least it should not. No one should be 
forced into poverty, no one should be harassed by shady debt 
collectors because of a medical emergency or a sick family 
member.
    We have taken important steps to protect Americans, but we 
can do more.
    I am asking the CFPB to create an ombudsman position for 
consumer medical debt.
    It is also why expanding Medicaid coverage to those who 
live in the 12 States that have refused to expand Medicaid 
under the Affordable Care Act is long overdue. I am 
appreciative of two Members of this Committee, Senator Warnock 
and Senator Ossoff, who are working to finally get this done, 
either here or in their State.
    Of course, meeting these challenges cannot be done by the 
Government alone. Private industry must act. This country needs 
private institutions to meet their obligations of financial 
assistance and the No Surprises Act.
    Today we are hearing from two advocates for consumers as 
well as one of my constituents, Robyn King, from Cleveland. Ms. 
King will tell her story of battling medical debt she never 
owed, after a nursing home cared for her mother.
    I look forward to hearing more about how we can protect 
Americans from medical debt and debt collector harassment. No 
one should have their financial future ruined simply because 
they get sick.
    Senator Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman.
    Pricing risk accurately is critical to the safety and 
soundness of financial institutions, and to consumers' ability 
to access affordable credit, because when borrowers default, 
lenders have to absorb the costs. That is why lenders generally 
look at information about credit history. It helps them 
estimate the risk of default and to price loans.
    Lenders who cannot access information that they consider 
predictive of risk are likely to restrict their lending to the 
borrowers with the thickest credit files, seek out relevant 
proxies for the credit information they are not able to obtain, 
or increase the price of loans to all borrowers in order to 
capture the uncertainty and the risk. This hurts all consumers, 
including low-income families and those without a long credit 
history. For all of those reasons, the Government should not 
suppress the reporting of accurate credit information.
    Unfortunately, so-called consumer groups and allies have 
sought to remove information from credit reports and thereby 
make them less accurate. I am afraid such actions will have 
adverse unintended consequences.
    Today's hearing title is the ``Growing Burden of Medical 
Debt''. It is an interesting but inaccurate title, because 
evidence suggests medical debt is actually falling, not 
growing.
    According to the CFPB's own estimate, which the Chairman 
cited, medical debt in collections last year was $88 billion. 
That is a nominal reduction of 10 percent over the last 3.5 
years.
    Another study showed that average medical debt in 
collection fell by 40 percent in the last decade. And that is 
despite the fact that over the same period medical spending 
increased 70 percent--and over 50 percent per capita. This is 
all illustrated on Chart 1 behind me.
    Now there are likely many reasons for a decline in medical 
debt. A primary driver was the improving economy. After the tax 
reform in 2017, those with the lowest wages--those most likely 
to have medical debt--were making the biggest gains in income.
    Another driver of the decline was the enactment of 
Obamacare and Medicaid expansion. Researchers estimate that for 
every $25 spent on Medicaid expansion, medical debt in 
collections decreased $1.
    There are many aspects that have made me question the 
wisdom and efficacy of Medicaid expansion, including its cost 
and the lack of evidence that it improved health outcomes. But, 
unsurprisingly, if you are willing to spend massive amounts of 
other people's money, you can transfer individuals' debts onto 
the taxpayers. That is illustrated in Chart 2.
    So all available evidence suggests there is no ``growing'' 
burden of medical debt. In fact, the scale of medical debt is 
often misunderstood. As illustrated in Chart 3, medical debt in 
collections represents less than 1 percent of all household 
debt. Two-thirds of medical debt collections are under $500, 
and bankruptcy from medical debt is extremely rare, as 
illustrated in Chart 4--3/100ths of 1 percent of the population 
suffers bankruptcy each year as a result of a hospitalization.
    And medical debt is not strictly an American phenomenon. 
Every health care system in the developed world includes out-
of-pocket payments. According to the World Health Organization, 
even before Medicaid expansion, the likelihood that out-of-
pocket expenses would exceed a quarter of one's income was 
roughly as rare in the United States, 0.8 percent, as Canada or 
the Ukraine, about 0.5 percent, and considerably rarer than in 
Italy, Spain, Korea, Switzerland, and other countries in the 
developed world.
    Recently, credit reporting agencies announced changes that 
will reduce the amount of medical debt that appears on consumer 
credit reports going forward. Now, if a credit reporting agency 
decides to exclude this information, I do not think it is the 
Government's role to meddle with such a decision. However, if 
credit reporting agencies had collectively decided the 
opposite--if every one of them had gotten together and decided 
they would begin at the same time to add consumers' medical 
debt information onto reports--I suspect the howls and protests 
about greed and collusion would have been deafening.
    What appears to have occurred here was that a political 
campaign, which included the CFPB, bullied lenders and credit 
rating agencies into removing this information. This kind of 
misuse of power by the administrative state has grown all too 
common. It is an example of how Congress has become far too 
comfortable with the Executive branch seizing the Article I 
lawmaking authority of Congress.
    We need to be careful that any actions considered to 
address symptoms--in this case debt from a health condition--do 
not make matters worse. This new credit reporting agency policy 
does not actually lower the cost of medical care. In fact, it 
will either raise costs or reduce access.
    It may end up discouraging people from paying medical 
bills. That could lead to health care providers finding ways 
not to treat individuals without an obvious means to pay. And 
by eliminating one metric in a credit rating, it may cause 
credit rating agencies to use other metrics, or proxies, that 
are less accurate, which could actually hurt low-income 
populations more.
    These kinds of downstream effects would not be shocking 
given that the entire effort to micromanage credit ratings is 
coming from an agency that has no expertise on complex medical 
billing and health care systems.
    It should remind us that intervention into the market, no 
matter how noble advocates may think they are being, will have 
consequences, usually unintended consequences. And second, 
interventions should come after careful deliberation by the 
people's representatives, not diktats from unelected 
bureaucrats.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey.
    I will introduce today's five witnesses. Robyn King, a 
former second-grade teacher's assistant in Cleveland, now works 
part-time and volunteers when she is not caring for her family. 
Ms. King uses her voice to shed light on the terrible toll that 
medical debt is taking on average Americans.
    Emily Stewart is the Executive Director of Community 
Catalyst, overseeing the direction of its advocacy of consumer 
health care rights and the organization's finances and 
operations. She has two decades of experience in health care 
advocacy.
    Dr. Benedic Ippolito studies health care financing and the 
pharmaceutical market and its regulations and the effect of 
health care costs on the personal finances of Americans. He is 
a Senior Fellow in Economic Policy Studies at the American 
Enterprise Institute.
    David Hyman is the Scott Ginsburg Professor of Health Law & 
Policy at Georgetown and is an adjunct scholar at the Cato 
Institute, a doctor as well as a lawyer. He served most 
recently as the Ross and Helen Workman Chair in Law and 
Professor of Medicine at the University of Illinois.
    Berneta Haynes is a staff attorney at the National Consumer 
Law Center, working on a portfolio that includes consumer 
medical debt policy and energy policy. She recently published a 
report examining the intersection between the racial health gap 
and the racial wealth gap and harm of aggressive medical debt 
collection.
    Thank you all for giving us your time and joining us today. 
I will begin with Ms. King. Welcome.

              STATEMENT OF ROBYN M. KING, OF OHIO

    Ms. King. Good morning. It is an honor to be here today, 
and it is a privilege to be able to share my story with this 
Committee.
    I am here to speak about my experience with medical debt. 
It is something that affects thousands and thousands of people 
in this country every year, and I know firsthand that the 
consequences of these burdens can be debilitating. I was lucky 
enough to get help from the attorneys at Legal Aid in 
Cleveland, but many people are not so lucky. For them and for 
others who have yet to be victimized, I share my story.
    I am a mother with three children. I worked as a teacher's 
assistant for 10 years, and recently transitioned to working 
part-time at a Learning Center. I still volunteer with children 
and older adults in my spare time. I also am the youngest of 
six siblings who all cared deeply about our mom.
    If you have ever brought a parent or loved one to a nursing 
home, knowing they will live out their final days there, 
knowing you are trusting all of their care and comfort to 
strangers, that is a day you will never forget. Because Mom was 
suffering from Alzheimer's and had difficulty understanding 
what was happening, my siblings and I decided I would be Mom's 
representative for the nursing home admission and sign all of 
the paperwork that allowed my mom to be admitted into the 
facility.
    My mom's Social Security checks were used to pay for her 
portion of the nursing home bill, and Medicaid covered the 
rest. Knowing that my finances were already tight, I made sure 
to check the box on the nursing home admission form which said 
I did not agree to be personally liable if finances for my 
mom's medical care ran out. I have a household of my own to 
take care of and knew that I could not afford to pay any 
nursing home for my mom's medical expenses.
    In November 2019, nursing home staff told me Mom's Medicaid 
needed to be reinstated, so I went to the office and filled out 
some more forms. I did not hear anything from them about 
Medicaid for months, so I assumed everything had been taken 
care of.
    I was shocked when the nursing home told me, in May 2020 
that Mom's Medicaid actually had not been reapproved and that I 
was now responsible for paying a huge bill. Why had they not 
told me this months ago? How could they have kept this 
information from me, when I always did everything the nursing 
home asked me to do? Maybe we could have figured out a way to 
prevent them from coming after me for this debt.
    Because the nursing home took so long to tell me that 
Medicaid had stopped paying Mom's bills, the amount owed had 
grown huge. They were now trying to collect almost $70,000. And 
while I tried frantically to fix the situation, the nursing 
home started sending bills each month, every bill larger than 
the last.
    My mom passed away on October 3, 2020. Just 2 days earlier 
I had received notice that I was being sued by the nursing home 
for close to $80,000.
    I never had time to grieve. I kept so much inside; the 
stress was unbearable. I thought, I will not be able to afford 
my mortgage, and I am definitely going to lose my house. I 
could face a garnishment of my paycheck and be forced to live 
on a reduced income when money was already tight to begin with. 
What will I tell my kids? What does it mean, to have this kind 
of judgment against you? How will that impact the rest of my 
life? At one point I even thought, I would rather be with my 
mom. I felt defeated. I had nothing to give.
    The lawsuit made no sense to me since I told the nursing 
home that I would not be personally responsible for any of my 
mom's medical expenses. On my sister's advice, we called 
Cleveland Legal Aid. I am so grateful for my attorneys' help 
because they freed me from having to pay the nursing home debt 
with my own money.
    The nursing home is still pursuing my mom's estate for what 
is owed, so it is still impacting my life. While I am not 
personally on the hook for the debt, they are still going after 
my family's assets.
    I hope you can take action to protect people like me and 
not allow medical debt to upend people's lives. Medical care is 
not something we can opt out of. Getting sick or having a 
family member get sick should not force people to face crushing 
amounts of debt. I thought that I had done everything right in 
taking care of my mom, but without Cleveland Legal Aid I would 
have had an enormous judgment against me, and my family's 
financial future would have been devastated. There must be a 
better way to take care of each other and not leave people like 
me facing life-changing amounts of debt. There is just no 
excuse for this in America.
    I hope that my testimony today will help turn my story into 
something positive. Thank you.
    Chairman Brown. Thank you, Ms. King.
    Ms. Stewart of Community Catalyst, welcome.

   STATEMENT OF EMILY STEWART, EXECUTIVE DIRECTOR, COMMUNITY 
                            CATALYST

    Ms. Stewart. Thank you. Good morning, Chairman Brown and 
Ranking Member Toomey and Members of the Committee. Thank you 
for having me.
    Community Catalyst is a national nonprofit organization 
that is dedicated to building the power of people to build a 
health system that is rooted in race equity and health justice 
in a society where health is a right for all. For nearly 25 
years we have worked at the forefront of local, State, and 
national conversations to make the health system more 
responsive to people, and over the course of that time one of 
the major takeaways from our work has been the deep connection, 
and troublesome connection, between people's health and their 
overall financial well-being.
    There is no issue that shines a brighter light on this 
reality than the issue of medical debt. It is important to put 
medical debt into its context. Our health system is costly, it 
is imbued with inequity, and this harms us all. Billing and 
collection is complicated and confusing, even to experts, but 
its patients, individual people who are put in the position of 
resolving that complexity, whether it be figuring out whether 
or not they were owed, they owed the bill to begin with, or 
navigating a dispute between their health plan and their health 
care provider.
    There are many sources of medical debt, with the largest 
share from ER visits, dental care, and diagnostic tests, such 
as x rays and MRIs. It is such a concerning issue that 40 
percent of Americans say that they are more fearful of medical 
debt than a serious illness. The Census Bureau estimates that 
17 percent of U.S. households hold medical debt. There are 
other studies that have higher estimates, and it is entirely 
plausible that most people know someone who has been impacted.
    In preparation for this hearing I decided to survey my 
siblings. I have seven of them. Five of us have had medical 
debt, in the thousands, ranging from ER visits, pregnancy-
related care, and surprise bills.
    Of course, medical debt impacts some more than others. 
People who are uninsured are more likely to have medical debt, 
and importantly, many of them are living in States that have 
not expanded Medicaid under the Affordable Care Act. And due to 
discriminatory barriers to affordable coverage and care, there 
is a disproportionate effect on people of color, with 27 
percent of Black households and just under 19 percent of Latinx 
households reporting medical debt.
    Families with children are far more likely to have medical 
debt than those without, and families with a member who has a 
disability are nearly twice as likely to have medical debt.
    Medical debt can have a profound impact on people's health 
and well-being. Thirty-seven percent of people with medical 
debt have used up all their savings to pay off their bills, 31 
percent took on new credit card debt, and 11 percent took out a 
mortgage against their income or another type of loan. People 
report reduced spending on food, clothing, and other household 
items.
    It should come as no surprise that people with medical debt 
are much more likely to report experiencing stress, anxiety, 
and depression, and the COVID-19 pandemic has exacerbated the 
issue for many. For example, through our work with coalition 
partners in Illinois, a story surfaced of a man with work 
authorization in the State. He was rushed to the emergency room 
with COVID-19 complications and subsequently charged $11,798. 
The hospital denied him any financial assistance, even though 
he was eligible under State law, and even though Federal 
assistance was already in place for COVID-19-related care. He 
paid over $1,000 each month for a number of months because he 
was afraid that his bill would impact his immigration status or 
his ability to buy a home.
    Whether a person's medical bill problem is alleviated or 
aggravated hinges on who holds the debt. Many hospitals offer 
extended payment plans directly to their patients, and, in 
fact, nonprofit hospitals are required to offer financial 
assistance under Federal community benefit standards. However, 
many people are unaware of these programs and not adequately 
informed of them upon receiving their first bill.
    For many people the headache begins when the bills are sent 
to third-party collection agencies. These agencies are paid a 
percentage of the debt they collect, they typically report the 
accounts to the credit bureaus, and if not paid promptly they 
pursue legal action. Numerous press reports have detailed 
people having their wages garnished, bank accounts frozen, or 
liens put on their homes.
    Medical debt can ruin people's credit rating, and to make 
matter worse, the data is often inaccurate or out of date. An 
analysis by CFPB showed that nearly two-thirds of collection 
complaints assert that the debt was never owed, never verified 
as the consumer's debt, already paid, or discharged in 
bankruptcy.
    Proposals to address this issue are necessarily 
multifaceted, but there are a few to highlight. Senator Brown, 
Community Catalyst supports your proposal for a CFPB ombudsman 
to resolve medical debt complaints. It is important to also 
eliminate unpaid medical billing data on credit reports and to 
hold credit reporting agencies accountable for accurate data. 
It is important also to strengthen nonprofit community benefit 
standards, prohibit wage garnishments and liens on property, 
and to apply those protections to for-profit hospitals. Also, 
extending Medicaid coverage to people who are living in States 
that have yet to expand Medicaid.
    Thank you for hearing this testimony, and I look forward to 
your questions.
    Chairman Brown. Thank you, Ms. Stewart. Dr. Ippolito.

   STATEMENT OF BENEDIC N. IPPOLITO, SENIOR FELLOW, AMERICAN 
                      ENTERPRISE INSTITUTE

    Mr. Ippolito. Thank you very much for having me. I am going 
to echo some of the comments that we just heard.
    Medical debt is different than other forms of consumer 
debt. A lot of consumers are not actively pursuing this debt. 
They are not taking on debt intentionally. More than that, I 
think it reflects these features of the health care system that 
attract justifiable criticism. It is very expensive. Billing is 
quite complex. And so certainly the extra attention that we pay 
to medical debt is certainly understandable.
    That said, as policymakers consider the issue it is 
important to be able to begin with a firm grasp of the 
empirical reality surrounding medical debt in the United 
States.
    I think many of us think of medical debts a reflecting tail 
events, those kinds of unexpected, catastrophic health shocks 
that can give rise to very large bills. And while those debts 
absolutely do exist, they do not, when you look at the data, 
appear to be representative of the typical experience in the 
United States.
    Instead, medical debt is a very common phenomenon that 
seems to reflect actually much more typical common interactions 
with the health care system. So for example, about 16 or 17 
percent of adult Americans have medical collections on their 
credit reports. The average medical collection itself is about 
$300. I think for a lot of people that is relatively modest, 
and I do not mean modest in the sense that that is unimportant, 
but modest in the sense of the kind of bills that we know can 
happen in the health care system, certainly that we heard about 
today.
    In aggregate, consumers owe about $100 billion in medical 
collections alone. That number is a little higher if we include 
other forms of medical debt. About 92 percent of those medical 
collections, however, are never reported as paid on credit 
reports.
    These debts can affect household finances in a few ways. 
Perhaps most centrally they can lower credit scores. That 
obviously makes it harder or more expensive for consumers to 
borrow. Many have called that practice into question, so it is 
worth considering what policy changes are warranted and what 
tradeoffs we might need to consider.
    Obviously, credit scores are meant to summarize credit 
worthiness, so if they are not doing that accurately, if they 
are penalizing consumers for things they cannot control or 
otherwise are not predictive of their credit worthiness, those 
are the kinds of things we ought to address. And I think some 
medical debts clearly fit in that category. So for example, a 
medical debt that is initially incurred because of confusion 
over a billing process but is later repaid surely carries less 
predictive risk about future credit risk than a bill that is 
willingly incurred and then goes unpaid for a long time. So 
policies that, for example, would distinguish between things 
like paid versus unpaid medical collections certainly would 
help consumers who are inappropriately penalized in the current 
market.
    Some obviously argue in favor of policies that go further 
and disallow the reporting of otherwise accurate medical 
collections. Indeed, the major credit bureaus have announced a 
policy that would do that for the majority of medical 
collections recently.
    Those kinds of policies come with more potential unintended 
consequences that I do think are at least important to flag for 
policymakers who are interested in this area and are interested 
in these policies actually achieving their stated goals.
    So in particular, while medical collections are certainly 
less predictive of some future repayment risk, that does not 
mean they are not predictive. So we have to think about, from 
the perspective of a lender there is a risk that they place 
some value on that is now not eliminated. It is obscured. So 
how are they going to respond to the fact that they cannot 
observe this anymore?
    So I think there are a couple of potential ways. First, you 
might try and reweight. You might try and put more emphasis on 
other kinds of things that appear on credit records that are 
not medical collections but you think are indicative of a 
similar risk, other kinds of collections, other kinds of 
delinquencies, for example. It is not ex ante obvious that the 
distributional consequences of that kind of reaction are better 
than the status quo.
    If they do not think they can find a clear proxy they may 
instead just increase the cost of borrowing across all 
consumers or, in some cases, you may change your lending 
habits, particularly in populations where you think there is a 
high unobserved risk and where it is harder to proxy. So for 
example, young consumers carry a lot of medical debt in the 
United States. They also tend to have thinner credit files. 
That is the kind of population where you may be more concerned 
about that kind of adverse reaction.
    Finally, these tradeoffs, I think, sound a little bit 
academic or theoretically but they certainly are reminiscent of 
very real-world issues that we see, certainly in the health 
care market, where we try and achieve similar things through 
regulatory redistribution. So for example, health insurance 
premiums cannot vary with health status or expected health 
expenditures. That obviously is motivated by equity concerns, 
and it has a similar flavor to what we are talking about today. 
We are trying to help people who have this unexpected health 
shock that they cannot necessarily prevent.
    That said, it distorts pricing signals in the market and it 
creates a lot of instability. We constantly have to be vigilant 
over risk-pooling issues in these markets. We constantly have 
to be vigilant about unraveling incentives that distort the 
actual stability of the fundamental market itself. If the 
market is not stable, if we do not have insurance products that 
are readily available to consumers, that really attenuates the 
benefit of a lot of these policies.
    And so that is not to say this is not an important topic 
and it is not worth addressing. It is to say, however, that 
there are important potential unintended consequences that we 
should be aware of and we certainly should emphasize.
    I thank you for having me, and I look forward to the 
questions.
    Chairman Brown. Thank you, Dr. Ippolito. Professor Hyman.

  STATEMENT OF DAVID A. HYMAN, SCOTT K. GINSBURG PROFESSOR OF 
     HEALTH LAW & POLICY, GEORGETOWN UNIVERSITY LAW CENTER

    Mr. Hyman. Chairman Brown, Ranking Member Toomey, and other 
Members of the Committee, thank you for inviting me to speak to 
you. I am a professor at Georgetown where, among other classes, 
I teach consumer protection and a course entitled ``How to 
Regulate'', so this is very much something I think about a lot.
    I am primarily a health law and policy person. I have also 
been the victim of identity theft and had to deal with medical 
bills for myself and my kids, so I think the difficulty of 
going fourth when we have got such a distinguished lineup of 
speakers is to say, ``well, a lot of what I wanted to say has 
been said already'' so I will focus on a couple of issues that 
have not been flagged yet.
    The first is you hear numbers thrown around, and those 
numbers vary widely. We have already heard figures ranging from 
$89 billion to $195 billion in medical debt. When you see a 
range that wide you should conclude that there is some 
uncertainty as well as variation in the way in which people are 
measuring things, and that is exactly what is going on here. 
Methodological choices and definitional uncertainty matter.
    So the most common approach to quantifying the problem of 
unpaid medical debt involves looking at credit reports, and 
those credit reports flag certain things as coming from medical 
providers that are in collections. Now that is series of 
limitations that you ought to at least be aware of, because 
most of these studies involve data from a single credit 
reporting agency and the same information is not necessarily 
reported to all of the agencies.
    Second, the accounts that are in collections are 
necessarily a subset of all accounts, particularly given the 
time lag in reporting. But the additional problem that is often 
not appreciated is the designation of medical debt obscures the 
reality that patients often use a variety of strategies to pay 
for their health care bills, including using traditional credit 
cards, using medical credit cards, taking out home equity 
loans. And if those go into collections, even though they are 
attributable to an underlying medical cost, they will not be 
flagged as medical debt.
    And the alternative approach uses surveys, including data 
gathered by the census, that has some advantages and some 
disadvantages, I am happy to talk about in the Q&A. But the 
short version is the numbers that you hear reflect a very 
specific set of assumptions about what does and does not count 
as medical debt.
    The second point I want to make is that medical debt is a 
function or a result of multiple interactive factors. You can 
start with whether somebody receives health care or not, 
second, how much they are billed for it, third, how much is 
paid for or discounted off of that list price from various 
sources, and that includes insurance, it includes self-payment, 
it includes charity care policies. And all of those are moving 
parts that affect whether any given individual, with any given 
set of circumstances, has medical debt, and if so how much.
    The third point I want to make is that modifications to 
credit reporting of medical debt may provide some relief, but 
as Dr. Ippolito already said, you should be wary of some of the 
unintended consequences. It is a solution to a symptom. It is 
not a solution to the underlying problem.
    And that is the last point I want to end with and 
emphasize, which is the reason why we have medical debt is 
because health care in the United States is expensive. And if 
you want to address the problem of medical debt you should 
treat the underlying cause, i.e., the disease, rather than the 
symptom, and focus on ways of making health care less 
expensive.
    I flagged two possible strategies but there are many 
others, one of which is pushing hospitals to more fully 
implement their charity care obligations, specifically 
nonprofit hospitals which have long had an obligation to do 
that under both State and now Federal law. I think to the 
extent hospitals are a major source of these bills that result 
in medical debt, that is going to be an important tool that 
already exists.
    Second, I want to acknowledge that Congress has already 
taken an important step in addressing some aspects of medical 
debt with the No Surprises Act that both Dr. Ippolito and I 
helped consult on in the context of that legislation. And there 
are additional strategies as well.
    But it is important to keep your eye on the ball. The ball 
here is high health care costs that result in these problems, 
and those problems are disproportionately borne by certain 
portions of the population.
    Thank you very much for your attention.
    Chairman Brown. Thank you, Professor Hyman. Ms. Haynes, 
welcome.

   STATEMENT OF BERNETA L. HAYNES, STAFF ATTORNEY, NATIONAL 
                      CONSUMER LAW CENTER

    Ms. Haynes. Thank you. Chairman Brown, Senator Toomey, 
Members of the Committee, I appreciate the opportunity to 
testify on the economic impact of medical debt.
    I provide my testimony today on behalf of the low-income 
clients of the National Consumer Law Center. We believe medical 
debt poses a severe problem disproportionately impacting Black 
and Latinx families. We ask that you provide consumer 
protections to prevent medical debt at the outset, and to 
shield consumers from harmful debt collection practices and 
long-term impacts on their well-being.
    According to the CFPB, medical debt represents more than 
half of all debts in collection and remains a leading cause of 
bankruptcy. I live in Georgia, where I have worked directly 
with consumers and seen up close the real-life impacts of the 
medical debt crisis. Nineteen percent of Georgians have medical 
debt in collections, 17 percent of White Georgians and 21 
percent of non-White Georgians.
    Likewise, 17 percent of Ohioans have medical debt in 
collection, 17 percent of White Ohioans, 23 percent of non-
White Ohioans. Similar disparities exist across the country.
    Consumers with medical debt face aggressive debt 
collection. To avoid debt collection, families drain their 
savings, increase their credit card debt. They turn to 
deceptive financial products like medical credit cards and 
high-interest loans to pay off medical bills. Because medical 
debt often appears as other forms of debt in individual credit 
history, it likely has an even larger impact than data 
currently shows.
    Aggressive debt collection takes so many forms. Hospitals 
sometimes turn bills over to third-party debt collectors who 
may use frequent, abusive, and harassing communication to 
pressure consumers to pay. Medical debt is consistently the 
most common type of debt about which people are contacted by 
debt collectors. Debt collectors contact Black households at 
twice the rate of White households, according to the FTC.
    In some cases, health care providers, hospitals, and debt 
collectors file lawsuits against the consumer. They may use 
these lawsuits to seek liens against homes, garnish wages and 
tax refunds, seize bank accounts, and even seek civil arrest 
warrants when the debtor fails to appear for proceedings.
    Between 2009 and 2018, hospitals in Maryland filed nearly 
40,000 lawsuits that resulted in wage garnishment, often from 
their own employees, according to National Nurses United. Johns 
Hopkins alone sought over $4 million in wage garnishment 
lawsuits between 2009 and 2018. It has a service area that is 
45 percent Black.
    The University of Virginia hospital system has a history of 
relying on property liens to collect unpaid medical bills, as 
Kaiser Health News reported in 2020. As a result of that 
expose, the system canceled decades of liens placed on low-
income patients. VCU Medical Center in Richmond, a majority 
Black city, filed the most lawsuits of any single hospital from 
2018 to 2020, according to researchers from Johns Hopkins.
    Worse yet, the ACLU documented cases of arrest for medical 
debt in several States, including Maryland, Tennessee, and 
Arkansas. In Maryland, they observed the practice of patients 
being jailed for medical debts of less than $1,000. The result 
of these practices essentially revives debtor's prisons, which 
should be illegal in this country.
    These debt collection tactics, for obvious reasons, put 
fear in consumers, harming not only their financial well-being 
but also their physical and psychological well-being. Consumers 
may forego or delay medical care because they fear medical 
debt, which can harm their physical health and lead to greater 
medical expenses in the future. Carrying debt and being 
subjected to these debt collection practices also causes 
psychological distress, increasing anxiety, depression, 
substance use disorders, and other mental health disorders. All 
these things can lead to greater medical bills and debt down 
the road--a vicious cycle.
    So to address this epidemic of medical debt we ask that you 
focus on ways to prevent medical debt so that seeking health 
care does not send individuals into a financial tailspin. We 
ask that you consider consumer protections that address the 
racial disparities in medical debt, ban wage garnishment, bank 
account seizure, property liens, foreclosure of homes based on 
medical debt liens, and civil arrest warrants for medical debt; 
prohibit debt collection during health insurance appeals; end 
the practice of turning over medical debt to third-party 
collectors; prohibit providers and debt collection from 
reporting all medical debt to credit reporting bureaus; 
enacting universal publicly funded national single-payer health 
plan administered at the State and local levels.
    There is more detail on these recommendations found in my 
written testimony. I do thank you for the opportunity to 
testify and I would love to answer any questions you have.
    Chairman Brown. Thank you, Ms. Haynes.
    We will begin the questioning with Senator Warnock, who has 
been advocating for Medicaid expansion in Ms. Haynes' State, as 
she noted. Senator Warnock, you are recognized.
    Senator Warnock. Thank you so very much, and it is good to 
see all of our witnesses, particularly Ms. Haynes from Georgia, 
and thank you, Mr. Chairman, for letting me go early due to my 
presiding obligations.
    The Affordable Care Act allowed States to expand Medicaid 
to over 13 million Americans. This is transformational 
legislation for our country. But sadly, there are still 646,000 
Georgians unable to access free and affordable health care 
because State politicians continue to prioritize politics over 
people.
    I have been fighting for Medicaid expansion long before I 
came to the Senate, and when I arrived I fought really hard to 
get further incentives for Georgia to expand Medicaid, which we 
won in the American Rescue Plan, and the State continues. State 
politicians continue to refuse to expand Medicaid, a net loss 
to the State and certainly to the 646,000 Georgians in the 
Medicaid gap.
    And that is why after that I introduced the Medicaid Saves 
Lives Act, which would give folks in States like Georgia access 
to health care, and I am fighting to close the coverage gap to 
ensure that everybody, everywhere, no matter your ZIP Code, has 
access to health care.
    Ms. Haynes, do we tend to see more medical debt in States 
like Georgia that have not expanded Medicaid than States that 
have expanded Medicaid?
    Ms. Haynes. That is absolutely correct. Households in the 
South, the region with the highest concentration of Black 
folks, carry more medical debt than other regions. This is 
exactly the region, too, where Medicaid expansion has not 
really happened. Of the 12 States that have not expanded 
Medicaid, eight of them are in the South. That has left many 
people uninsured, particularly Black folks. Also many of those 
Southern States have a high percentage of for-profit hospitals 
too, that are not subject to the charity care provisions of the 
ACA.
    But that said, the uninsured rate in the South is 
definitely connected to the lack of Medicaid expansion and 
connected to the increasing levels of medical debt in that 
region.
    Senator Warnock. So you see a direct link between medical 
indebtedness in States like Georgia and its refusal to expand 
Medicaid.
    Ms. Haynes. Absolutely. The last State, I believe, said 
that Georgia has the fourth-highest or third-highest uninsured 
rate in the country. I have worked with clients directly in 
Georgia who are underinsured or uninsured, facing medical debt, 
and trying to figure out whether they need to file bankruptcy, 
trying to figure out how they can negotiate some sort of 
payment plan. It is definitely at crisis levels in States like 
Georgia.
    Senator Warnock. Thank you. Medicaid expansion is something 
I am focused on, and I will keep pushing for that, but also 
capping the cost of prescription drugs would be helpful. 
According to the Kaiser Family Foundation nearly 1 in 10 
adults, or roughly 23 million people, owe medical debt, and as 
of 2020, American families collectively owed over $140 billion 
in medical debt. In Georgia, there is over $120 million in 
medical debt for over 108,000 folks.
    This is unacceptable. People should not have to choose 
between getting the prescription drugs they need and groceries. 
And this is why I introduced the Capping Prescription Drug 
Costs Act and the Affordable Insulin Now Act, which would cap 
out-of-pocket drug costs for Americans.
    Ms. Stewart, how would proposals that cap out-of-pocket 
drug costs like mine alleviate, or help to alleviate the 
medical debt crisis in our country?
    Ms. Stewart. Thank you, Senator Warnock, and Community 
Catalyst supports both pieces of your legislation. Thank you 
for that.
    It is quite clear, based on the testimony of many people 
here, that it is underlying health care costs and people's 
inability to afford health care is a major driving factor. 
Kaiser Family Foundation also found that of people who have 
incurred medical bills that they cannot afford, 53 percent of 
them connect them to out-of-pocket prescription drugs costs. So 
absolutely, efforts like the one that you are undertaking with 
your bills would help the underlying issues and help alleviate 
the burden of medical debt.
    Senator Warnock. And Kaiser has done work, as I recall, in 
the past on the impact of Georgia's refusal to expand Medicaid 
on the Georgia economy. It is a drag on people's health care. 
It is a drag on the Georgia economy. Is that correct?
    Ms. Stewart. That is absolutely correct. There are many 
studies showing the connection between Medicaid expansion and 
improving overall economic well-being.
    Senator Warnock. So we would do well to expand Medicaid in 
the 12 nonexpansion States or for us to have Federal 
legislation to make sure that folks in those States can access 
a Medicaid-like program, and we would do well to cap the cost 
of prescription drugs, a net gain for the Georgia economy and 
for people's health care.
    Ms. Stewart. Absolutely, and it would help millions of 
people across the country.
    Senator Warnock. Thank you so much.
    Chairman Brown. Thank you, Senator Warnock.
    Senator Toomey is recognized.
    Senator Toomey. Thank you, Mr. Chairman. Dr. Ippolito and 
Professor Hyman, let me address this question to the two of 
you. And I think you touched on this but I just want to be 
clear. Can credit reporting and debt collection policies 
actually solve the underlying problem of high or unexpected 
medical debt or would that require some health care policy 
change? Dr. Ippolito, you can go first.
    Mr. Ippolito. Well, yes. So I guess I am going to echo 
something Professor Hyman said. But the challenge is that we 
are dealing with a clear symptom. Medical debt reflects 
something--it reflects something mechanical. A bill was not 
paid, obviously, but it reflects the fact that there was a bill 
that was potentially quite expensive and there was an inability 
to actually pay it.
    So the challenge is if we are trying to address this as a 
banking system, if we are trying to address this through credit 
reporting changes, if we have not actually changed the 
underlying risk that the lenders are responding to, for 
example, in that case, then the lenders are going to respond 
some other way. We have to assume they are going to respond to 
the fact that there is some risk that they cannot observe. So 
clearly we are going to see some response, and that is where I 
worry more about the unintended consequences.
    Senator Toomey. Professor Hyman.
    Mr. Hyman. Yes, I would echo that. I think you should think 
separately about the bills that have already been accumulated 
versus the bills going forward. But I do not think changes in 
credit reporting practices meaningfully change the debt that is 
owed, although they may change the visibility of that debt. And 
if you do not do something about the cost of health care you 
should expect future medical debt to compound itself rather 
than, as I said previously, addressing the root cause of the 
problem.
    Senator Toomey. Right. And this is one of the reasons I am 
concerned that the CFPB seems to be running point on this. They 
have no authority to make changes to health care policy, they 
do not have any particular expertise in health care policy, and 
they certainly are not going to address the underlying 
problems.
    Let's talk a little bit, if we could, about the effects of 
suppressing information. Now I understand that there might be 
categories of medical debt that may not be particularly 
predictive about a person's creditworthiness. I do not know, 
something like hospitalization for a car accident is something 
that is obviously completely
involuntary, extremely unusual, could be very expensive if you 
do not have insurance.
    On the other hand, I think somebody--and, Dr. Ippolito, I 
believe it might have been you--pointed out that a very large 
majority of unpaid medical debt is under $500, it is a few 
hundred dollars, which seems to suggest something closer to a 
more routine medical expense, and failure to pay that, maybe 
that tells us something different. Maybe that has a different 
predictive value with respect to creditworthiness.
    Could you talk a little bit about the differences between 
different kinds of medical debt in terms of their predictive 
value and the unintended consequences that could emerge if that 
which has some predictive value is suppressed and is simply 
obscured to creditors?
    Mr. Ippolito. Yes, I think there are two things there. So 
the first thing is you point to one of the big challenges when 
you look at the data on this topic is that the distribution of 
medical debt often does not look like what you are expecting, 
because I think so many of us are thinking car accident. It is 
the unavoidable thing that generates a huge bill. It is easy to 
understand how that generates a lot of debt.
    But that really is atypical when you look at the credit 
profiles that the CFPB----
    Senator Toomey. That is atypical.
    Mr. Ippolito. That is atypical. Yes, that is right. The 
typical experience is the median medical collection is $300-
$310, I believe, in 2020. Three-hundred-ten dollars can be 
generated in a lot of health care interactions that are not the 
catastrophic situations.
    So I think your question speaks to the way I think about 
this topic, which is that we are seeing something that is an 
interaction between two things. One is there is a health care 
component, obviously, but there is also a personal finance 
component too. And so if you are seeing $300 bills, $200 bills, 
$100 bills not getting paid, it is not completely obviously to 
me that the answer is, well, it is obviously a health care 
problem per se, obviously the cost point notwithstanding, it 
seems to me that we have a broader personal finance problem, 
that again, suppressing information on a credit panel is not 
going to get rid of that risk. It is just going to hide the 
risk. And we know people are going to respond because we see it 
in other markets. And so that is the core tension I see.
    Senator Toomey. Professor Hyman, did you want to comment on 
that?
    Mr. Hyman. Yes. I would just add I think it is hard to 
infer much about the creditworthiness of a particular 
individual simply based on the size of the medical bill that 
they received, especially if you are looking at bills in 
isolation when, you know, a single encounter with a health care 
system can result in multiple bills, each of which might be in 
collection.
    And so the dollar amount is informative of the distribution 
but it does not tell you that much about whether there has been 
an income shock or ability to repay has been affected or not. 
You need more information on that.
    Senator Toomey. Thank you. Thanks, Mr. Chairman.
    Chairman Brown. Senator Warren, from Massachusetts, is 
recognized.
    Senator Warren. Thank you, Mr. Chairman.
    So this is an important hearing. Medical debt is the most 
common form of debt on consumer credit records. It represents 
about 60 percent of all consumer debts listed on credit 
reports. It totals as much as $140 billion. And for the nearly 
1 in 5 Americans with medical debt in collections who are, by 
the way, disproportionately Black and Hispanic, it means facing 
aggressive and often predatory collection practices that can 
ruin your credit, garnish your wages, and drive you into 
bankruptcy. It also means that when it damages your credit 
score it drives up costs for mortgages, credit card, and other 
financial products.
    Medical providers often outsource their debt collection to 
other businesses. In recent years, one of the big players to 
pop up in this space is--surprise, surprise--private equity. 
Giant private equity firms have slipped their tentacles across 
the health care industry, spending about $750 billion over the 
last decade to buy up everything from hospitals to ambulances 
to the companies that bill patients and track them down to 
collect those debts.
    Ms. Haynes, you are an expert on medical debt collection 
practices and their impact on families, so let me ask you. How 
would you characterize private equity's collection practices? 
Does it have a good track record of following the law and doing 
right by consumers?
    Ms. Haynes. Private equity hospitals and debt collection 
are as much a part of the problem in the medical debt crisis as 
the other players. They are very aggressive in their collection 
practices. They file lawsuits against patients. They harass 
them via phone, report their debt to CRAs, even when a debt is 
not owed. They are as big a player in the medical debt crisis 
as any other players in this crisis.
    And I should say that these aggressive debt collection 
practices involving liens on homes are particularly damaging. 
Hospitals, once they actually seek a lien on a home, it can 
really damage the person's current asset value and their 
housing stability, ultimately.
    Senator Warren. All right. And I just want to underline one 
of the phrases you used in there--including when the debt is 
not even owed.
    Ms. Haynes. Yes.
    Senator Warren. I would like to know how much of those $300 
medical bills are not even actually owed.
    But debt collection is an ideal business for private equity 
because their whole business model rests on squeezing companies 
and people dry. The standard playbook is to buy up a company, 
by loading it up with debt, squeeze the company to extract 
profits, then take the money and run after a few years.
    In the medical debt collection business that means doing 
whatever it takes to collect as much money as possible from 
patients, and do it as fast as they can. So it is no wonder 
that private equity is gobbling up medical debt collection 
firms right and left, rolling them up into consolidated debt 
collection giants. In recent years, private equity has been 
behind as much one-third of the acquisitions of these 
companies.
    Ms. Stewart, as the Executive Director of Community 
Catalyst, a consumer health advocacy center headquartered in 
Boston, you work to protect consumers across the country from 
predatory medical debt collections. In your view, is the 
consolidation of medical debt collectors under private equity 
ownership likely to be in consumers' best interests?
    Ms. Stewart. Senator, as you noted the objective of private 
equity is, generally speaking, to make big profit and to 
attract investors. In the world of health care delivery, 
private equity has usually meant rising health care costs, 
particularly for people. So if past practice is a predictor of 
the future, it is highly unlikely that private equity 
consolidating medical collection practices is going to be a 
good thing for people.
    Senator Warren. Thank you. You know, medical debt is one of 
the biggest threats to families' financial security, and I am 
glad that the CFPB has taken steps to reduce this risk, 
including by pressuring the big three credit reporting agencies 
to clear up to 70 percent of medical debt from credit reports. 
This is going to boost scores for millions of Americans.
    But we also need to crack down on the role that Wall Street 
private equity firms are playing in the medical debt crisis, 
whether that is providing care, billing, or debt collection. My 
Stop Wall Street Looting Act would better align incentives 
between private equity and the companies they take over in 
order to protect patients and their lives, financial and 
otherwise, and make sure that they are not ruined by corporate 
greed.
    So I think this is an area we need to work on.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Warren.
    Senator Tillis, from North Carolina, is recognized.
    Senator Tillis. Thank you, Mr. Chairman. Thanks to all the 
witnesses for being here.
    I know there are some people that think the CFPB wading 
into this space makes sense. I am not one of them. I think we 
have seen their expansion of influence through the hostile 
takeover of the FDIC by the director. Now we see them wanting 
to move into the health care space. And I do think it is a 
problem we need to address. I just do not necessarily think 
that is the purview of this Committee to deal with it. If you 
listen to Senator Warnock, virtually every solution he had to 
this problem dealt with Committee subject matter outside of our 
jurisdiction.
    Dr. Ippolito and Professor Hyman, Senator Toomey mentioned 
a few statistics. I just want to make sure that I am right and 
see if there are any other indicators we should be following. A 
little bit less than 1 percent medical debt is in collections. 
Is that right?
    Mr. Ippolito. I am not sure what percent of medical debt in 
total.
    Senator Tillis. Yes. I think it is somewhere around 0.93 
percent of all household debt, and only about 8 percent of that 
ultimately gets collected.
    Now one number that I am curious about is that medical debt 
has reduced substantially, about 40 percent since 2009. You 
would logically think some of that tracks with the 
implementation of the Affordable Care Act and expansion of 
Medicaid. Are there any other things that would have 
potentially contributed to the reduction in medical debt over 
that period of time?
    Mr. Ippolito. Well, I mean, broadly speaking I am sure that 
the improved economy from about 2010 to now has to have 
improved part of what we are seeing there, and other outcomes 
on credit reports.
    Senator Tillis. Professor Hyman, when you were talking 
about if this credit reporting is no longer taken into account 
as a predictive indicator, I think you said something to the 
effect that lenders would somehow have to respond to that risk. 
What would that look like? Give me some examples of unintended 
consequences.
    Mr. Hyman. So, look, it is hard to make predictions, 
especially about the future, to quote Yogi Berra, or maybe it 
was Mark Twain. But in any event, you know, as I indicated in 
my written testimony, I would expect some increase in credit 
scores to happen. But the question would be whether credit 
agencies would make adjustments, as Dr. Ippolito indicated.
    Senator Tillis. Setting the bar for what may or may not be 
a good, or----
    Mr. Hyman. Exactly. Basically either modifying the formula 
to come up with numbers that actually match more closely the 
ability to repay, or moving the bar for what counted as a good 
risk versus a bad risk.
    With my health care hat on, though, I would point out that 
there are potential follow-on consequences within the health 
care system, so health care providers may become less willing 
to take patients that are unable to pay in full at the time of 
service. And I would also expect, as I indicated in my written 
testimony, some increased consolidation, because larger 
providers are better able to weather this storm than a smaller, 
individual practice might be.
    Senator Tillis. What other significant potential unintended 
consequences can come from addressing the symptom versus some 
of the underlying problems that you mentioned in your opening 
testimony?
    Mr. Hyman. Oh, yes, I apologize for not addressing that. 
The other problem, of course, is this is a feedback loop 
indicating the problems with the American health care system, 
and it is no different than turning off the fire alarm. The 
fire is still going. You just no longer have the same evidence 
of the underlying problem, and you may not feel the same 
urgency to put the fire out.
    Senator Tillis. Ms. Haynes, I was more curious than 
anything. You mentioned that the Black and Hispanic communities 
are disproportionately hit by this. I think you also mentioned 
there are two times, or they are likely to be contacted twice 
as many times as a White person who may be in medical debt.
    Have you looked at it along socioeconomic lines? Is there 
much disparity, for example, between a Black, Hispanic, and 
White poor family? So, do you understand the question?
    Ms. Haynes. Yes. That is actually a really good question. 
But the data shows that in ZIP Codes that are predominantly 
Black, no matter income, they are more likely to be contacted 
by debt collectors than White ZIP Codes and non-Black ZIP 
Codes. So actually the data does show that across incomes, 
Black folks are still more likely to be contacted by debt 
collectors.
    Senator Tillis. OK. Thank you. Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Tillis.
    I will ask my questions now, starting with Ms. King. In May 
2020, you first received your alarmingly high bill--I know you 
have said some of this in your testimony--of $69,000 from the 
nursing home that cared for your mother. In October 2020, 
shortly after her passing, the nursing home sued you for close 
to $80,000.
    What impact did this enormous amount of medical debt have 
on your life? Did you imagine you would ever be free of this?
    Ms. King. In that amount I could not. It was just really 
more than I could take in at that time. I was grieving. You 
know, my mom had just passed, and I was just trying to figure 
it all out, like how could they do this? I said I would not be 
responsible, and how am I getting sued.
    So I had no idea how I would handle that, how I would take 
care of paying that amount, and what were they going to do to 
me. So no, I had no idea. It was unbelievable. I felt terrible, 
and it was tough. It was ridiculously tough.
    Chairman Brown. And fortunately you found legal services 
and they found you?
    Ms. King. I found legal services and they helped me.
    Chairman Brown. And Cleveland has a particularly good legal 
services, Legal Aid Society.
    Ms. King. Very much so. They are amazing.
    Chairman Brown. Thank you.
    Ms. Stewart, as we pointed out, medical debt does not mean 
someone is a credit risk. It means they got sick. Accidents and 
sickness, as all five of our witnesses pointed out, can happen 
to anyone at any time, yet people with medical debt are 
harassed and often made to feel like a burden to society. 
Obviously, medical debt is not the fault of the person who gets 
sick.
    My question is this. Would you say that our financial 
system treats medical debt like a moral failing?
    Ms. Stewart. Yes, I would say that our financial system 
treats it as an individual moral failing, when it really is a 
failing of the financial system and the health system taken 
together. As we discussed during this hearing so far, the 
health care system is not regulated in terms of health care 
costs, and people are bearing the brunt of rising costs, being 
forced to pay higher deductibles, higher co-insurance.
    And the financial system, in terms of billing and 
collection around medical debt does not take any of that into 
account, which is why we are really grateful at Community 
Catalyst that you are holding hearings like this to have 
conversations about systemic reforms that need to take place, 
both in the financial systems sector as well as the health 
systems sector.
    Chairman Brown. Thank you, Ms. Stewart.
    My last question, Ms. Haynes. Under pressure, as you know, 
Equifax, TransUnion, and Experian just took an important step 
to wipe 70 percent of medical debt off credit reports. These 
changes will help the financial lives of millions of consumers. 
However, that means 30 percent is left, obviously. You have 
said in the past that medical debt is not predictive of credit 
risk. So since medical debt is not a good indicator of credit 
risk, should medical debt even be part of a credit report? 
Should all medical debt be prohibited from being reported?
    Ms. Haynes. Yes. As I suggested in my recommendations in my 
testimony, ideally we should end the practice of turning over 
any debt to debt collectors, considering how involuntary and 
unpredictable debt from medical emergencies tends to be.
    And I should also add that the credit bureaus and the 
change that they made, while it is wonderful, there are a 
couple of categories of medical debt that is going to be 
removed from credit reports. A lot will still remain on 
people's credit reports. So debts of less than $500, for 
instance, will be removed, debt that has been paid off. And 
that will help 15 percent of Americans. But if you look at the 
stats from the Urban Institute, the average medical debt 
Americans have in collections is $797-$854 for non-White 
communities. So those individuals will still be left on the 
hook and still see those debts in their credit histories.
    Chairman Brown. Thank you. With these changes in how 
medical debt is reported I think it is worth considering what 
next potential steps the CFPB and others might take to further 
lighten the medical debt burden.
    Senator Ossoff, from Georgia, is recognized from his 
office.
    Senator Ossoff. I would like to extend a particular warm 
welcome to you, Ms. Haynes. Thank you for joining us and 
representing the State of Georgia.
    I would like to begin with you as well and ask you, Ms. 
Haynes, based upon your knowledge--and then I am going to turn 
to Professor Hyman with the same question--how does the 
American experience of incurring massive debt because of a 
medical emergency, because you or a family member needs a 
medical procedure, how does that compare with the experience of 
folks in other wealthy countries around the world?
    Ms. Haynes. Well, as I noted in my testimony, in terms of 
the recommendations, enacting a publicly funded, universal, 
national single-payer plan, administrated at the State and 
local levels, would go a long way toward remedying this 
problem. In various countries outside of the United States they 
do have some version of a public option, a public-payer system. 
So I will not speak to that in any more detail because I would 
have to get back to you about how that would actually look.
    But medical debt in this country is a uniquely American 
problem, and we need to address it as it stands currently.
    Senator Ossoff. Professor Hyman, in the course of your 
research, whether or not you have undertaken a formal 
comparative analysis with other countries, nevertheless, what 
is your impression, your reaction to the same question, how the 
American experience of medical debt contrasts with the 
experience of folks in other OECD or industrialized, advanced 
countries?
    Mr. Hyman. So thank you, Senator, for the question. That 
has not been the primary focus of my research, but my sense, 
based on having done this for quite a while, is that the United 
States is an outlier, to say the least, relative to other 
countries, in the cost of its health care system, which has 
predictable consequences for medical debt.
    Other countries vary in their delivery systems as well as 
their financing, but the United States is, nonetheless, an 
outlier.
    Senator Ossoff. Thank you. Ms. Haynes, I spoke with a 
fellow Georgian named Felicia from Hogansville, who took care 
of her father after he recently suffered a stroke. The family 
faced steep medical bills. The impact of that debt has lowered 
her credit score and imposed a huge burden on the family. As a 
result, she was unable to take out a loan that was necessary 
for some home repairs. This is, of course, not an uncommon 
story.
    Ms. Haynes, folks do not choose to incur medical expenses, 
for the most part. Correct?
    Ms. Haynes. That is correct. Medical debt tends to be very 
unpredictable and involuntary. It usually forces people to 
drive up their credit on credit cards, taking out personal 
loans. Medical debt really can throw people into a real 
financial tailspin.
    Senator Ossoff. And as a fellow Georgian, Ms. Haynes, you 
are well familiar with the ongoing saga of the State of 
Georgia's refusal to expand Medicaid under the Affordable Care 
Act, one of just 12 States that has made that decision. Eighty 
percent of medical debt is held by households with zero or 
negative net worth.
    How could Medicaid expansion in the State of Georgia, which 
Senator Reverend Warnock and I have fought for, we delivered 
resources to make it an even better deal for the State of 
Georgia. Georgians are already paying Federal taxes at the same 
level as folks in other States but not getting this investment 
in public health, forcing low-income and middle-income 
Georgians into the emergency room instead of into preventative 
health care.
    Ms. Haynes, in your opinion, what would be the impact of 
Medicaid expansion in Georgia on the burden of medical debt 
that is faced by so many of our fellow Georgians?
    Ms. Haynes. Yes. Thank you very much for that question. 
Georgia, as you know, has one of the highest uninsured rates in 
the country. It disparately impacts Black and Latinx families 
in Georgia. Expanding Medicaid would not only help in terms of 
the rural hospital closures that we have seen in Georgia that 
are directly connected to the lack of Medicaid expansion, but 
it would also help reduce the medical debt crisis that is 
facing many Black and Latinx Georgian families, by making sure 
that they are not lost within the coverage gap.
    Senator Ossoff. Thank you, Ms. Haynes.
    Ms. Stewart, as has been discussed, Equifax, Experian, and 
TransUnion recently announced changes to the way that they 
score medical debt, and as I understand it now, medical 
collection debt under $500 will not appear on consumer credit 
reports.
    The average amount of medical debt, according to my staff's 
research, is approximately $2,400, for those who are carrying 
it. So Ms. Stewart, how will the credit reporting agencies' 
announcement of this policy change impact individuals who have 
more than $500 of medical debt?
    Ms. Stewart. Thank you, Senator. Well, for people who have 
debt more than $500 they will have an extra year to resolve the 
debt, so that is the good news of the policy. But beyond that, 
people with debt over $500, it would not be removed from their 
credit
report, and that is something that we would encourage CFPB to 
pursue and explore.
    Senator Ossoff. Thank you all for your well-informed and 
concise questions, and Mr. Chairman, thank you for holding this 
hearing.
    I will just close with this note. You know, it is a 
travesty that millions of Americans suffer not just from 
illness that they are unable to treat or prevent in the way 
that most of us would want and expect because they cannot get 
health insurance, but then the burden of debt, at these moments 
of stress and crisis for their families. We have widespread 
medical debt in this country. We have children with school 
lunch debt in this country. We have to stop burdening working 
people across the United States with debt for the necessaries 
of life like food and health care. And I thank you, Mr. 
Chairman, for convening this hearing to shine a light on this 
issue.
    Chairman Brown. Thank you, Senator Ossoff.
    Senator Cortez Masto, from Nevada, is recognized.
    Senator Cortez Masto. Thank you, Mr. Chairman. Thank you 
for holding this important hearing. And thank you to the 
panelists for joining us this morning.
    One issue I want to raise here is the issue of medical debt 
in Indian Country. For generations the Federal Government has 
had a trust and treaty responsibility to provide care to 
sovereign Tribal nations, but the volume of medical debt across 
Tribal communities is evidence that we have fallen well short 
of meeting those obligations.
    In 2019, the New York Times report found that Indian Health 
Services declined to pay medical bills for more than 500,000 
patients, saddling them with more than $2 billion in medical 
debt over the preceding 3 years.
    Ms. Stewart and Ms. Haynes, how will these changes in 
reporting affect Native Americans? And I will start with Ms. 
Haynes.
    Ms. Haynes. Unfortunately I cannot speak to that particular 
issue, but if we are talking about federally held debt you may 
be aware of some of the changes related to federally held 
medical debt recently, that may go a long way toward helping 
consumers avoid some of that, the credit downfall of medical 
debt.
    Senator Cortez Masto. Thank you. Ms. Stewart.
    Ms. Stewart. I would agree with Ms. Haynes. And just to 
highlight that one of the big issues with respect to medical 
debt and its impact on Native Americans is a lack of data, and 
that is something that Community Catalyst is really focused on 
making sure that there is more investment and disaggregated 
data so that there is much more clarity about the impact on 
Native American populations.
    Senator Cortez Masto. Thank you, because I sit on the 
Senate Indian Affairs Committee, and this is one area, and you 
just touched on it, is the lack of data. And because of the 
lack of data we are missing out on important services to our 
communities, including our Tribal communities across the 
country. And we really have to start focusing on those that are 
being left behind.
    So let me jump to another area, which is the lack of 
communication I find here in some of this, and important 
information that needs to get out there that is not, at times.
    In the recent CFPB report, it was illuminating because it 
said that 50 percent of Black respondents in a survey did not 
know that hospitals provide free and reduced-cost care for low-
income patients. Now do we know what the level of awareness of 
these programs is among Spanish-speaking and other non-English-
speaking communities? I mean, this is a travesty.
    Let me just stop there and ask maybe Ms. King or Ms. 
Stewart or Ms. Haynes. I am concerned that the information is 
not getting out there. And we have a report here showing that 
members of our Black community are not getting it. What about 
those that have a language barrier? How do we ensure that they 
are getting access to this information that is going to be 
important for their health?
    Ms. Stewart. I will start, Senator. Well first of all there 
are no requirements that hospitals, including nonprofit 
hospitals, that are, in fact, 501(c)(3) nonprofit 
organizations, proactively screen people for financial 
assistance programs (FAPs). There are responsibilities to make 
information publicly available, but for many, many people they 
report that they had no awareness that they were eligible for 
financial assistance.
    For people for whom English is not their primary language 
and need language assistance that is really a very critical 
issue. And you can imagine how that issue is expounded when 
somebody has a language barrier. So it is deeply concerning 
overall, and especially concerning for people who face language 
barriers.
    Senator Cortez Masto. And what should we be doing about it? 
What can Congress do about this, to make sure this information 
gets out there?
    Ms. Stewart. Well, there could be changes to the nonprofit 
community benefit standards to require nonprofit hospitals to 
proactively screen people for FAPs prior to billing them. In 
addition, there could be financial support for consumer 
assistance programs and other community-based organizations who 
could be available with resources to offer that kind of 
assistance to people.
    Senator Cortez Masto. Thank you. Yes, please.
    Mr. Hyman. Yes, I would just add that the Affordable Care 
Act included requirements for nonprofit community hospitals to 
develop a plan and report on the plan, but it did not include 
parallel requirements to disclose to patients, along with all 
the other things that they do disclose to patients, ``Hey, we 
have a charity care program and here are the details on how you 
should apply for it.''
    So you could do that either with legislation or regulation, 
it seems to me, as a condition of participation.
    Senator Cortez Masto. Thank you. Yes, Ms. Haynes.
    Ms. Haynes. And I just wanted to add those great comments 
as well, that in addition to improving the FAP so that folks 
are required to screen patients before collecting, there is no 
right of action that patients have currently under the 
Affordable Care Act to enforce the FAP requirements. So 
allowing patients to actually enforce State and Federal FAP 
laws in court, to hold violating hospitals liable, would also 
go a long way toward improving this charity care.
    Senator Cortez Masto. Thank you. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Cortez Masto.
    We will wrap the hearing up. Thank you to the five of you 
for being here.
    As Senator Toomey's charts pointed out, the Affordable Care 
Act, especially its Medicaid expansion, not only improved the 
health of Americans, but it has also improved their financial 
health as well. Thanks to the ACA, States that expanded 
Medicaid programs--we know Georgia is an exception--but States 
that expanded Medicaid programs saw medical debt fall by 44 
percent. Think of that, almost in half.
    I would add, parenthetically, I know Senator Cortez Masto 
cares so much about this that the implementation of the child 
tax credit also dropped the poverty rate by about that number, 
40 percent, for America's children.
    The ACA Medicaid expansion helped reduce medical debt. Much 
more needs to be done. I look forward to working with 
colleagues in Congress and at the CFPB to reduce medical debt, 
including by creating a medical debt ombudsman. Americans 
should be able to focus on their health, not worry about their 
financial health, in, as Ms. King pointed out so well, those 
particularly difficult times.
    To highlight the need for congressional action I will 
submit for the record three testimonials, from Mindy Hedges of 
Ohio, from Penelope Wingard of Senator Tillis' State, from 
Sloane Wesloh from Senator Toomey's State. Without objection, 
so ordered.
    Chairman Brown. Thanks to the witnesses. For Senators who 
wish to submit questions, these questions are due 1 week from 
today, on Tuesday, April 5th. To the witnesses, to the five of 
you, if you get questions submitted, please submit your 
responses for the record within 45 days from the day you 
receive them.
    The hearing is adjourned.
    [Whereupon, at 11:19 a.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    Think about watching a loved one rushed to the hospital in an 
ambulance. Or learning you have a chronic disease that's going to 
require years of care and monitoring. These kinds of medical ordeals 
are some of the scariest moments in a family's life.
    They can happen at any time, to anyone, without warning. Suddenly 
you're coordinating doctor's visits and calls with insurance companies. 
You're nervously checking your savings account. You're spending hours 
on interminable phone calls trying to get answers.
    And you're dealing with it all while worrying whether your husband 
or your mother or your child will make it out of the hospital, or 
whether their health problems will continue.
    As the cost of prescription drugs rise, hospital bills skyrocket, 
and debt collectors start calling, families are forced to figure out 
how to make ends meet, instead of focusing on their health.
    Families all over the country are telling us that.
    We heard from Penelope Wingard, an after-school teacher from North 
Carolina, who lost her health coverage while battling breast cancer. 
When her medical bills began to pile up, her doctors eventually stopped 
seeing her.
    Soon after, Ms. Wingard had an aneurysm, in addition to vision 
loss, both of which required surgery. Because of the financial 
situation caused by her cancer diagnosis, Ms. Wingard was forced to 
wait and seek care from a limited list of providers who allow sliding 
scale payments.
    Debt collectors call her--harass her--every single day. And now her 
credit is ruined because of her health.
    Right now, Ms. Wingard needs additional testing to ensure her 
cancer has not returned, which has added an additional $2,000 to her 
debt. Instead of focusing on battling her illness, she has to figure 
out how to battle the debt collectors.
    And Ms. Wingard is far from alone.
    In the United States, an estimated 43 million Americans hold $88 
billion dollars of medical debt on their credit reports, and this 
problem is growing. It can happen to anyone. Low-income families, Black 
and Hispanic households, veterans, young adults, and older Americans 
are hit particularly hard.
    And debt collectors make this already exhausting experience worse.
    They call over and over, they make threats, they even contact 
patients' employers.
    Take for example, Mindy Hedges, from Delaware County, Ohio. She has 
had type 1 diabetes since she was 5-years old.
    For most of her adult life, until the passage of the Affordable 
Care Act, she was unable to get health insurance because she had a 
preexisting condition.
    After losing her business in the 2008 recession, her medical bills 
began piling up, and she was unable to re-pay them. That's when the 
debt collectors started calling. And calling. And calling. And calling.
    Ms. Hedges did her best--she tried to negotiate, she even begged 
for relief. But the harassment continued. At one point, she was even 
afraid to leave her house.
    That harassment is part of the business model.
    A counsel at a medical debt collection agency owned by a private 
equity firm had some choice words about harassing patients--they said 
they found the first 20 to 30 calls to be, quote, ``highly effective.''
    If the calls don't work, debt collectors often move on to even more 
aggressive tactics like litigation--forcing people to go through 
lengthy, expensive, and emotionally draining court proceedings, often 
while still battling cancer or grieving a loved one.
    For patients, litigation can result in garnished wages or property 
liens. We even see people thrown in jail because they couldn't afford 
to pay. It's the return of debtor's jail. People in the United States 
of America today are in jail, right now, because of medical debt.
    And of course, wherever we find suffering, Wall Street finds an 
opportunity.
    Private equity firms are making inroads in the medical debt 
collection market. Between 2015 and 2016, one-third of all debt 
collection agency acquisitions were bought by private equity.
    These firms exist purely to maximize investor profit, no matter the 
cost.
    Maybe that's why private equity-owned debt collection agencies are 
responsible for an outsized number of consumer complaints--many 
concerning attempts to collect debt from people who do not owe them.
    We must address the growing crisis of medical debt burdening 
American families.
    President Biden and his Administration are working to remove 
barriers to medical debt forgiveness for veterans, and to make it 
easier and cheaper for them to get care.
    No one who served this country should be saddled with debt for 
illness or injuries incurred in the line of duty.
    And the Biden administration has wasted no time in implementing the 
No Surprises Act, which took effect on January 1st.
    This bipartisan law finally bans surprise medical bills. One way to 
prevent debt collector harassment is to protect people from debt in the 
first place.
    The Consumer Financial Protection Bureau is also doing important 
work exposing the abuses Americans face while just trying to get health 
care.
    And after increasing scrutiny and pressure, the three credit 
reporting bureaus--Equifax, Experian, and TransUnion--all announced 
they would significantly change how medical collection debt is 
reported. These changes are expected to remove nearly 70 percent of 
medical debt in collections from credit reports. This is a positive 
first step.
    And this first step by the credit reporting bureaus gets to a basic 
fact that we too often ignore: medical debt does not correlate with 
credit risk, it correlates with illness.
    It should be obvious--anyone can get sick. Anyone can get in a car 
accident. It has nothing to do with your ability to pay your bills--or 
it shouldn't.
    No one should be forced into poverty or harassed by shady debt 
collectors because of a medical emergency, or a sick family member.
    We've taken important steps to protect Americans. But can we do 
more.
    I'm asking the CFPB to create an ombudsman position for consumer 
medical debt.
    It's also why expanding Medicaid coverage to those who live in the 
12 States that have refused to expand Medicaid under the Affordable 
Care Act is long overdue. I'm appreciative of two Members of this 
Committee, Sen. Warnock and Sen. Ossoff, who are working to finally get 
this done.
    Of course, meeting these challenges cannot be done by the 
Government alone.
    Private industry must act. This country needs private institutions 
to meet their obligations of financial assistance and the No Surprise 
Act.
    Today we're hearing from two advocates for consumers, as well as 
one of my constituents, Robyn King, from Cleveland. Ms. King will tell 
her story of battling medical debt she never owed, after a nursing home 
cared for her mother.
    I look forward to hearing more about how we can protect Americans 
from medical debt and debt collector harassment. No one should have 
their financial future ruined because they get sick.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Thank you, Mr. Chairman.
    Pricing risk accurately is critical to the safety and soundness of 
financial institutions, and to consumers' ability to access affordable 
credit. Because when borrowers default, lenders have to absorb the 
costs. That's why lenders generally look at information about credit 
history--it helps them estimate the risk of default and price loans.
    Lenders who cannot access information that they consider predictive 
of risk are likely to restrict their lending to the borrowers with the 
thickest credit files, seek out relevant proxies for the credit 
information they aren't able to obtain, or increase the price of loans 
to all borrowers in order to capture the uncertainty and risk.
    This hurts all consumers, including low-income families and those 
without a long credit history. For all of those reasons, the Government 
should not suppress the reporting of accurate credit information.
    Unfortunately, so-called consumer groups and allies have sought to 
remove info from credit reports and thereby make them less accurate. 
I'm afraid such actions will have unintended consequences.
    Today's hearing title is the ``Growing Burden of Medical Debt''. 
It's an interesting but inaccurate title. Evidence suggests medical 
debt is actually falling, not growing.
    According to the CFPB's own estimate, medical debt in collections 
last year was $88 billion. That's a nominal reduction of 10 percent 
over the last 3.5 years.
    Another study showed that average medical debt in collection fell 
by 40 percent in the last decade. Yet over the same period, medical 
spending increased 70 percent--over 50 percent per capita.
    Now, there are likely many reasons for a decline in medical debt. A 
primary driver was the improving economy. After tax reform in 2017, 
those with the lowest wages--those most likely to have medical debt--
were making the biggest gains in income.
    Another driver of the decline was the enactment of Obamacare and 
Medicaid expansion. Researchers estimate that for every $25 spent on 
Medicaid expansion, medical debt in collections decreased $1.
    There are many aspects that have made me question the wisdom and 
efficacy of Medicaid expansion, including its cost and the lack of 
evidence that it improved health outcomes. But, unsurprisingly, if 
you're willing to spend massive amounts of other people's money, you 
can transfer individuals' debts onto the taxpayers.
    So all available evidence suggests there is no ``growing'' burden 
of medical debt. In fact, the scale of medical debt is often 
misunderstood. Debt in collections represents less than 1 percent of 
all household debt. Two-thirds of medical debt collections are under 
$500. Bankruptcy from medical debt is extremely rare.
    And medical debt is not strictly an American phenomenon. Every 
health care system in the developed world includes out-of-pocket 
payments.
    According to the WHO, even before Medicaid expansion, the 
likelihood that out-of-pocket expenses would exceed a quarter of one's 
income was roughly as rare in the United States (0.8 percent) as Canada 
or the United Kingdom (0.5 percent), and rarer than in Italy (1.1 
percent), Spain (1.8 percent), Korea (3.9 percent), or Switzerland (6.7 
percent).
    Recently, credit reporting agencies announced changes that will 
reduce the amount of medical debt that appears on consumer credit 
reports going forward.
    Now, if a credit reporting agency decides to exclude this 
information, I don't think it's the Government's role to meddle with 
such a decision. However, if credit reporting agencies had collectively 
decided the opposite--that every one of them would begin at the same 
time to add consumers' medical debt info onto reports--I suspect the 
howls and protests about greed and collusion from the usual suspects 
would have been deafening.
    What appears to have occurred here was that a political campaign, 
which included the CFPB, bullied lenders and credit-rating agencies 
into removing this information. This kind of misuse of power by the 
administrative state has grown all too common. And it's an example of 
how Congress has become far too comfortable with the Executive branch 
seizing the Article I lawmaking authority.
    We need to be very careful that any actions considered to address 
symptoms--in this case debt from a health condition--don't make matters 
worse. This new credit reporting agency policy doesn't actually lower 
the cost of medical care. In fact, it will either raise costs or reduce 
access.
    It may end up discouraging people from paying medical bills. That 
could lead to health care providers finding ways not to treat 
individuals without an obvious means to pay. And by eliminating one 
metric in a credit rating, it may cause credit rating agencies to use 
other metrics that are less accurate, which could actually hurt low-
income populations more.
    These kind of downstream effects wouldn't be shocking given that 
the entire effort to micromanage credit ratings is coming from an 
agency that has no expertise on complex medical billing and health care 
systems.
    It should remind us that intervention into the market--no matter 
how noble advocates may think they are being--will have consequences. 
And interventions should come after careful deliberation by the 
people's representatives, not diktats from unelected bureaucrats.
                                 ______
                                 
                  PREPARED STATEMENT OF ROBYN M. KING
                                of Ohio
                             March 29, 2022
    Good morning. It is an honor to be here today, and it is a 
privilege to be able to share my story with you, Members of the U.S. 
Senate Committee on Banking, Housing, and Urban Affairs.
    I am here to speak about my experience with medical debt. It's 
something that affects thousands and thousands of people in this 
country every year, and I know firsthand that the consequences of these 
burdens can be debilitating. I was lucky enough to get professional 
legal help from the attorneys at Legal Aid in Cleveland, but many 
people are not so lucky. For them, and for others who have yet to be 
victimized, I share my story.
    I am a mother with three children, my youngest still in high 
school. I worked as a teacher's assistant for 10 years, and recently 
transitioned to working part-time at a Learning Center. I still 
volunteer with children and older adults in my spare time. I'm also the 
youngest of six siblings who all cared deeply about our Mom.
    If you've ever brought a parent or loved one to a nursing home, 
knowing they will live out their final days there, knowing you are 
trusting all of their care and comfort to strangers--that's a day you 
will never forget. I clearly remember walking into Jennings Nursing 
home, with the support of my five siblings, wondering if my mother, who 
had Alzheimer's, could grasp what was really going on. The group of us 
decided I would be Mom's representative for the nursing home admission 
agreement and sign all of the paperwork that allowed my Mom to be 
admitted into the facility.
    My Mom's Social Security checks were used to pay for her portion of 
the nursing home bill, and Medicaid covered the rest. Knowing that my 
finances were already tight, I made sure to check the box on the 
nursing home admission form which said I did NOT agree to be personally 
liable if finances for my Mom's medical care ran out. I have a 
household of my own to take care of and knew that I couldn't afford to 
have the nursing home come after me for my Mom's medical care.
    In November 2019, nursing home staff told me Mom's Medicaid needed 
to be reinstated, so I went to the office and filled out some more 
forms. I didn't hear anything from them about Medicaid for months, so I 
assumed everything had been taken care of.
    When COVID hit and the world shut down, I was especially worried 
about how lonely Mom must be as there was no way for my siblings and me 
to continue visiting her as often as we normally did. But it was a 
shock when the nursing home told me in May 2020 that Mom's Medicaid 
actually hadn't been reapproved many months earlier and that I was 
suddenly on the hook for paying a huge bill.
    They said, well, too bad, she is going to have to leave here and go 
somewhere else. But where else could she go, especially in the middle 
of the pandemic? Why hadn't they told me this months ago? How could 
they have kept this information from me, when I always did everything 
they asked me to do?
    But because the nursing home took so many months to tell me that 
Medicaid had stopped paying my Mom's bills, the amount she owed had 
grown huge--the nursing home was trying to collect almost $70,000 when 
I first learned of this issue. And while I tried frantically to fix the 
situation, the nursing home started chasing after me, sending bills 
each month in escalating amounts.
    My Mom passed away on October 3, 2020. It was just two days before 
that, on October 1st, that I had received mail which said that I was 
personally being sued by the nursing home for close to $80,000.
    I never had time to grieve. I kept so much inside; the stress was 
unbearable. I thought, I won't be able to afford my mortgage--I am 
definitely going to lose my house. I could face a garnishment of my 
paycheck and be forced to live on a reduced income when money was 
already tight to begin with. What will I tell my kids? What does it 
mean, to have this kind of judgment against you, how will that impact 
the rest of my life? At one point I even thought--I'd rather be with my 
mother. I felt defeated. I had nothing left to give.
    The lawsuit made no sense to me since I told the nursing home that 
I would not be personally responsible for any of Mom's medical 
expenses. On my sister's advice, we called Legal Aid--and it was just 
in time. I am incredibly grateful for my attorneys' help because they 
knew exactly what to do, they walked with me every step of the way, and 
they helped free me from the responsibility to pay the nursing home 
debt with my own money.
    The nursing home is still pursuing my Mom's estate for what is 
owed. So--it's still impacting my life. While I'm not personally on the 
hook for the debt, they're still going after my family's assets.
    As I stand here today, I cannot tell you how relieved I am to know 
I can keep my home, keep providing for my kids, keep my life as it is. 
There is no reason I should go into massive debt so that my mother 
could live out her final months in a safe and comfortable place, with 
her basic needs met. There is no reason my family's ability to build a 
better future for ourselves should be wiped out because my Mom got sick 
and we got her the medical care that she needed. There is just no 
excuse for this in America.
    I want my story to shed light on what's happening to normal, 
everyday people in this country who are just trying to care for 
themselves and one another.
    I hope you can take action to protect people like me and not allow 
medical debt to upend people's lives. Medical care, and end-of-life 
care especially, is not something we can opt out of. Getting sick or 
having a family member get sick should not force people to face 
crushing amounts of debt. I thought that I had done everything right in 
taking care of my Mom, but without the good fortune of having Legal Aid 
represent me, I would have had an enormous judgment against me, and my 
family's financial future would have been devastated. There must be a 
better way to take care of each other and not leave people like me 
facing life-changing amounts of debt.
    I do still believe in the positive potential of every day, and I 
hope that today, you can help me turn my story into something positive. 
Thank you.
                                 ______
                                 
                  PREPARED STATEMENT OF EMILY STEWART
                 Executive Director, Community Catalyst
                             March 29, 2022
    Good morning, Chairman Brown, Ranking Member Toomey, and Members of 
the Committee. Thank you for the opportunity to speak on the important 
issue of medical debt this morning.
    My name is Emily Stewart, I am the executive director of Community 
Catalyst, a national nonprofit organization with a mission to build the 
power of people to create a health system rooted in race equity and 
health justice and a society where health is a right for all.
    While great progress has been made in expanding access to coverage 
and care since passage of the Affordable Care Act, more must be done to 
expand comprehensive coverage and make care affordable. Thirty million 
Americans remain uninsured\1\ and many insured individuals face high 
deductibles and copayments if illness or injury strikes. When a 
person's medical bills exceed what they can pay, they are saddled with 
medical debt. There are many sources of medical debt, with the largest 
share arising from emergency room visits, hospitalizations, dental 
care, and diagnostic tests like x rays and MRIs.\2\
    U.S. Census Bureau data estimate that 17 percent of U.S. households 
held at least $195 billion in medical debt in 2019.\3\
    Who has medical debt? To start, the uninsured. More than one-third 
of people with no insurance have medical debt. Many of them are living 
in States that have not expanded Medicaid. People in these States also 
have a greater number of accounts being sent to collection when 
compared to residents of Medicaid expansion States.\4\
    Additionally, 22 percent of insured people have outstanding medical 
bills.\5\ This means just about anyone is at risk of incurring medical 
debt, especially as insurance deductibles, copayments and coinsurance 
increase year after year.
    Some people are at greater risk. As a result of discriminatory 
barriers to affordable coverage and care, there is a disproportionate 
effect on people of color, with nearly 27 percent of Black households 
and just under 19 percent of Latinx families having medical debt.\6\ In 
addition, households with income of less than 133 percent of the 
Federal poverty level are more likely to have problems paying medical 
bills. Families in households with children are far more likely to have 
medical debt than those with no children in the household. Families in 
which a member has a disability are nearly twice as likely to have 
medical debt as those families in which no family member has a 
disability.\7\
    Medical debt problems result from inadequate insurance, complicated 
insurance claim procedures and opaque billing and collection systems. 
People with medical debt often are forced to exhaust their savings to 
pay for medical bills, and consequently reduce their spending on food, 
clothing, and other household items, borrow money from friends or 
family members, or take on additional debts.\8\ Thirty-seven percent of 
people with medical debt or billing problems used up all their savings 
to pay their medical bills, 31 percent took on new credit card debt, 
and 11 percent took out a mortgage against their home or took out 
another type of loan to pay their medical bills.\9\
    Many others saddled with high medical debt delay needed care to 
avoid incurring more bills.\10\ The implications of this problem were 
made obvious over the past 2 years, as we have encouraged people to 
seek testing and treatment for COVID-19. Living with outstanding 
medical bills also creates health problems, causing stress that can 
lead to poor physical and mental health.\11\
    How do people hold debt? We know that medical debt comes in various 
forms: money owed directly to hospitals and providers; bills owed 
providers that that are being pursued by third-party collection 
agencies; payments for care that has been charged to credit cards; 
loans from companies that specialize in financing medical debt; and 
medical accounts that have been purchased by debt buyers. 
Unfortunately, we do not know precisely the amount of debt in these 
different categories.
    Some medical debt is masked as credit card debt. Several studies 
have found that one-third of those with credit cards have ongoing 
credit card debt because of medical bills.\12\ \13\ Analysis of payment 
patterns conducted by the JPMorgan Chase Institute illustrates the 
lingering effects of medical debt. They found that younger families are 
more likely to take on revolving credit card debt and older adults have 
elevated levels of credit card debt one year after making a medical 
payment of $1,500 or more.\14\
    In recent years we have seen a growing number of financial service 
firms that partner with providers on loans or payment plans. There are 
medical credit cards, often with high interest rates.\15\ Other 
companies claim to partner with hospitals or providers to offer 
flexible low-interest patient loans.\16\ Some issue patients a health 
care payment card to be used at any time for health-related 
expenses.\17\
    Who owns medical debt? Who holds the debt can make a huge 
difference in whether a person's medical bill problem is alleviated or 
aggravated. Many hospitals and providers offer extended payment plans, 
with no interest, directly to their patients. Nonprofit hospitals are 
obligated to provide charity care or financial assistance, but many 
people are unaware of these programs. The Washington State Office of 
the Attorney General recently filed lawsuits against two Washington 
hospitals alleging that employees were trained using scripts that gave 
patients the impression that they were expected to pay for their care, 
failing to notify them that they were eligible for financial 
assistance.\18\
There are many stories we could share; here are two from partner 
        organizations:
        This story is from our Illinois partners (Illinois Coalition 
        for Immigrant and Refugee Rights, Mujeres Latinas en Accion, 
        Southwest Suburban Immigrant Project, Mano a Mano Family 
        Resource Center, Legal Council for Health Justice and Enlace 
        Chicago)--A noncitizen patient with work authorization, became 
        ill with COVID-19 complications, was rushed to the emergency 
        room and billed $11,798. The hospital denied the patient any 
        financial assistance even though State law should have 
        permitted the patient a full discount, and Federal assistance 
        programs were in place for COVID-19-related services. The 
        patient paid over $1,000 out-of-pocket over a few months out of 
        fear that the bill would impact his immigration status and 
        ability to buy a home.

        And this story is from our New Mexico partners (New Mexico 
        Center on Law and Poverty, Casa de Salud and Forward 
        Together)--A pregnant patient was told the cost to deliver a 
        baby was $10,000, but she was never informed of financial 
        assistance or Medicaid options. Instead, she planned to sell 
        her personal belongings until a family member got involved and 
        helped her apply for Medicaid. She later received a bill for an 
        ultrasound. A nurse told her it should be covered, but the 
        unpaid bill showed up on a credit check three years later, 
        which severely damaged her ability to buy a house.

For many people, the headaches begin when bills are sent to third-party 
collection agencies. These agencies are paid a percentage of the debt 
they collect. They typically report the accounts to the credit bureaus 
and, if not paid promptly, pursue legal action.
    Private equity firms are also getting into the medical bill 
collection space. These companies are investing heavily in updating and 
scaling their collection services through technology. It is reported 
that there has been a surge in demand from hospitals for their services 
and that these companies are very profitable and attractive for 
investors.\19\ This will likely make it even more difficult for 
patients to negotiate reasonable payment plans directly with their 
local hospitals and providers.
    Is the debt even owed? Medical debt can ruin an individual's credit 
rating. Research from the Consumer Financial Protection Bureau (CFPB) 
found that 58 percent of collection accounts on credit reports are 
medical bills. These accounts are reported by third-party collection 
agencies; they often lack accurate or updated information from the 
original health care provider. While the CFPB estimates that $88 
billion in medical collections sit on consumer credit reports, other 
estimates range from $81 billion to $140 billion.\20\
    Many medical collection amounts are fairly low-dollar value. Sadly, 
a high proportion of reported accounts are for disputed bills. Analysis 
of collection complaints submitted to the CFPB found that nearly two-
thirds (63 percent) of complaints assert that either the debt was never 
owed, not verified as the consumer's debt, already paid, or discharged 
in bankruptcy.\21\ One complainant stated that ``that agency had me 
served with court papers. for medical bills. They had already been paid 
in full by my insurance company.'' Another said the collector 
``garnished my husband's check for almost $300 for bills we did NOT 
owe!''
    CFPB research has found medical collections are less predictive of 
future consumer credit performance than nonmedical collections. This 
has been acknowledged by the credit scoring industry and has resulted 
in changes to some scoring models. These revised scoring models either 
give less weight to medical collections or ignore paid collections when 
calculating scores. Given this, we welcome the CFPB's investigation of 
whether medical collections should be eliminated from credit reports 
altogether.
    What are debt collection practices? Third-party collection 
agencies, acting on behalf of hospitals and other providers, often 
pursue lawsuits. Legal actions include garnishing wages, putting liens 
on patients' homes and bank accounts, and even issuing civil arrest 
warrants for people who do not comply with repayment terms.
    Numerous press reports have detailed people having their wages 
garnished or bank accounts frozen.\22\ One report found that more than 
one-quarter of the top 100 hospitals, based on patient revenue, sued 
patients for medical bills between 2018 and 2020.\23\ In New York 
State, 55 hospitals had sued over 4,000 patients since the pandemic 
began, including the State's largest health system, which sued more 
than 2,500 patients during this time period.
    For-profit hospitals have also been aggressive in using lawsuits to 
collect from patients. Despite receiving $700 millions of dollars in 
COVID-19 relief funds, one for-profit chain filed thousands of lawsuits 
against patients struggling to pay their bills. In the early days of 
the pandemic, they garnished the wages of one patient making roughly 
$850 a month for a $9,000 bill resulting from an emergency visit due to 
food poisoning that had occurred two years before.\24\ Even publicly 
owned, governmental hospitals, took legal action, with one West 
Virginia hospital being responsible for close to 18,000 lawsuits.\25\ 
Early on in the pandemic in 2020, one family was surprised that their 
debit card was declined while purchasing groceries. They later learned 
that their bank account was locked due to medical debt owed to a 
hospital.\26\
    It may be shocking to learn that people can even end up going to 
jail due to medical bills. Yes, medical debtor prison is a possibility. 
One Kansas family incurred $70,000 in bills from their son's leukemia 
treatment and the mother's seizures related to Lyme disease. After the 
father missed a court appearance about these bills, and was unable pay 
bail set at $500, he was sent to jail.\27\ In an incident from another 
Kansas hospital, a women spent six hours in jail, paying a $250 bond, 
which went toward the judgement obtained for her medical bills. A 
lawyer then warned that if the judge issued another warrant for her 
arrest, bond the next time would be set at $500.\28\ An Idaho woman, 
who was unaware that she owed $950 from care received years before, 
only learned of it when deputies arrived at her door. ``They handcuffed 
me and took me down to the jail to put me in booking.'' They held her 
briefly until reaching the collection attorney who worked out a $20 per 
month payment plan, as the woman didn't make enough money for her wages 
to be garnished. She said it was the first time she had ever been to 
jail and that she was terrified.\29\
Recommendations
  1.  Extend Medicaid coverage to protect residents of States that have 
        not yet expanded Medicaid.

  2.  Strengthen nonprofit hospital Section 501r protections to 
        prohibit wage garnishments and liens on primary residences, 
        require more generous financial assistance and extend 
        protections to include the services of any provider of care in 
        a hospital or health system.

  3.  Extend Section 501r protections to for-profit hospitals and 
        health systems.

  4.  Promote cross-agency collaboration to facilitate patients' access 
        to insurance coverage and FAPs of health care providers.

  5.  Provide funding to State consumer assistance programs to assist 
        people in identifying coverage and resolving medical debt 
        problems.

  6.  Encourage the Department of Health and Human Services to:

    a.  Include a requirement in the No Surprises Act (NSA) final rule 
        that providers must screen uninsured patients for public 
        insurance programs and hospital financial assistance in 
        addition to providing good faith estimate of the cost of 
        services.

    b.  Monitor the NSA implementation to ensure that patients are not 
        billed, nor coerced into paying amounts exceeding those allowed 
        under this law.

  7.  Extend protections through funding COVID-19 testing and treatment 
        for uninsured people.

  8.  Establish an ombudsman office within the Consumer Financial 
        Protection Bureau to resolve complaints involving medical 
        collections and credit reporting and require the office to 
        issue annual reports.

  9.  Support the CFPB's actions to:

    a.  Hold credit reporting companies accountable for having 
        reasonable procedures in place to assure that medical debt 
        information is accurate and taking action against furnishers 
        who report inaccurate information.

    b.  Conduct additional research on medical billing collection 
        practices and their impact on patients and families.

    c.  Determine whether policies should be implemented to eliminate 
        unpaid medical billing data on credit reports altogether.

    Thank you for the opportunity to testify and I welcome your 
questions.
Endnotes
1. Kenneth Finegold, Ann Conmy, Rose C. Chu, Arielle Bosworth, and 
    Benjamin D. Sommers. ``Trends in the U.S. Uninsured Population, 
    2010-2020''. ASPE, February 11, 2021. https://aspe.hhs.gov/sites/
    default/files/private/pdf/265041/trends-in-the-us-uninsured.pdf
2. Kaiser Family Foundation/New York Times Medical Bills Survey 
    (conducted August 28-September 28, 2015). https://www.kff.org/wp-
    content/uploads/2016/01/8806-the-burden-of-medical-debt-results-
    from-the-kaiser-family-foundation-new-york-times-medical-bills-
    survey.pdf
3. Kaiser Family Foundation (2022). ``The Burden of Medical Debt in the 
    United States''. https://www.kff.org/health-costs/press-release/1-
    in-10-adults-owe-medical-debt-with-millions-owing-more-than-10000/
4. Raymond Kluender, Neale Mahoney, Francis Wong, and Wesley Yin. 
    ``Medical Debt in the United States, 2009-2020''. JAMA. 2021; 
    326(3):250-256. doi:10.1001/jama.2021.
5. Findings from the Commonwealth Fund Biennial Health Insurance 
    Survey, 2020. https://www.commonwealthfund.org/publications/issue-
    briefs/2020/aug/looming-crisis-health-coverage-2020-biennial
6. U.S. Census Bureau, Survey of Income and Program Participation, 
    Survey Year 2020.
7. U.S. Census Bureau (2021). https://www.census.gov/library/stories/
    2021/04/who-had-medical-debt-in-united-states.html
8. Peterson-KFF Health System Tracker (2022). ``Many Households Do Not 
    Have Enough Money To Pay Cost-Sharing in Typical Private Health 
    Plans''. https://www.healthsystemtracker.org/brief/many-households-
    do-not-have-enough-money-to-pay-cost-sharing-in-typical-private-
    health-plans/
9. Findings from the Commonwealth Fund Biennial Health Insurance 
    Survey, 2020. https://www.commonwealthfund.org/publications/issue-
    briefs/2020/aug/looming-crisis-health-coverage-2020-biennial
10. Peterson-KFF Health System Tracker (2022). ``Many Households Do Not 
    Have Enough Money To Pay Cost-Sharing in Typical Private Health 
    Plans''. https://www.healthsystemtracker.org/brief/many-households-
    do-not-have-enough-money-to-pay-cost-sharing-in-typical-private-
    health-plans/
11. Wiltshire, et al. ``Problems Paying Medical Bills and Mental Health 
    Symptoms Post-Affordable Care Act''. AIMS Public Health. May 6, 
    2020. http://www.aimspress.com/article/10.3934/publichealth.2020023
12. https://www.lendingtree.com/credit-cards/study/cardholders-credit-
    card-debt-due-to-medical-bills/
13. Demos (2007). ``Borrow To Stay Healthy: How Credit Card Debt Is 
    Related to Medical Expenses''. https://www.demos.org/sites/default/
    files/publications/healthy-web-0.pdf
14. ``Coping With Costs'' (Feb 2021), JPMorgan Chase Institute. https:/
    /www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/
    institute/pdf/institute-coping-with-costs-report.pdf
15. https://www.carecredit.com/faqs/#whatiscarecredit
16. https://www.myaccessone.com/Home/Faq
17. https://payzen.com/
18. https://www.atg.wa.gov/news/news-releases/ag-ferguson-files-
    lawsuit-against-swedish-other-providence-affiliated-hospitals
19. Private Equity Stakeholder Project (2021). ``How Private Equity 
    Profits From Aggressive Medical Debt Collection''. https://
    pestakeholder.org/how-private-equity-profits-from-aggressive-
    medical-debt-collection/
20. ``Medical Debt Burden in the United States February 2022''. https:/
    /files.consumerfinance.gov/f/documents/cfpb-medical-debt-burden-in-
    the-united-states-report-2022-03.pdf
21. U.S.PIRG (2017). ``Medical Debt Malpractice Consumer Complaints 
    About Medical Debt Collectors, and How the CFPB Can Help''. https:/
    /uspirg.org/sites/pirg/files/cpn/USN-012518-A3-REPORT/Medical-Debt-
    Malpractice-2.html
22. Health Affairs (2021). Hospital Lawsuits Over Unpaid Bills 
    Increased By 37 Percent In Wisconsin From 2001 To 2018. https://
    www.healthaffairs.org/doi/10.1377/hlthaff.2021.01130
23. Axios, Johns Hopkins University (2021). ``How America's Top 
    Hospitals Hound Patients With Predatory Billing''. https://
    www.axios.com/hospital-billing
24. Casey Tolan. `` `There's No Way I Can Pay for This': One of 
    America's Largest Hospital Chains Has Been Suing Thousands of 
    Patients During the Pandemic''. CNN Investigates, May 18, 2021. 
    https://www.cnn.com/2021/05/17/us/hospital-lawsuits-pandemic-invs/
    Index.html
25. Axios (2021). ``America's Biggest Hospitals vs. Their Patients''. 
    https://www.axios.com/hospitals-patients-lawsuits-billing-4bfa93b2-
    3bbf-48a5-b8e2-2f8a68c533a9.html
26. ``Hospitals in West Virginia Are Seizing Bank Accounts, Garnishing 
    Wages Over Unpaid Debt During Ongoing COVID-19 Pandemic'', Times 
    West Virginian, April 2020. https://www.timeswv.com/news/hospitals-
    in-west-virginia-are-seizing-bank-accounts-garnishing-wages-over-
    unpaid-debt-during-ongoing/article-2570a96e-82ac-11ea-b6cb-
    1f200dcac618.html
27. ``Dad in Kansas Jailed Over Medical Debt From Son's Leukemia 
    Treatments and Wife's Seizures'', People Magazine February 2020. 
    https://people.com/health/dad-jailed-over-medical-debt-from-sons-
    leukemia-treatments-and-wifes-seizures/
28. ``Thousands Visiting an Olathe Hospital Were Sued for Medical Debt. 
    Dozens Went to Jail'', KLC Journal, June 2020. https://
    klcjournal.com/olathe-hospital-medical-debt/Of-the-judgments-
    recorded-publicly-for-Emergency-Medicine-Care
29. ``Why Some Idahoans Are Being Served, Arrested and Sometimes Jailed 
    Over Medical Debt'', East Idaho News.com, May 2019. https://
    www.eastidahonews.
    com/2019/05/why-some-eastern-idahoans-are-being-served-arrested-
    and-sometimes-jailed-over-medical-debt/
                                 ______
                                 
               PREPARED STATEMENT OF BENEDIC N. IPPOLITO
              Senior Fellow, American Enterprise Institute
                             March 29, 2022
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                  PREPARED STATEMENT OF DAVID A. HYMAN
          Scott K. Ginsburg Professor of Health Law & Policy,
                    Georgetown University Law Center
                             March 29, 2022
    I have organized my testimony around four key points:

  1.  Quantifying medical debt involves both methodological choices and 
        definitional uncertainty.

  2.  Medical debt is a function of multiple interactive factors.

  3.  Modifications to credit reporting of medical debt may provide 
        some relief but is also likely to have unintended consequences.

  4.  Medical debt is a symptom of a larger problem, which will not be 
        solved by changes in credit reporting practices. If we want to 
        fix the problem of medical debt, we should be focusing on 
        making health care cheaper.
Quantifying Medical Debt: Methodological Choice and Definitional 
        Uncertainty
    Researchers have generally used credit reports to generate 
estimates of total medical debt, based on bills from medical providers 
that are unpaid and have been sent to a collection agency and reported 
to a credit reporting agency. There are good reasons to use this 
approach; credit reports are objective sources of quantifiable 
information, and if an account is labeled as coming from a medical 
provider, it is unlikely to be attributable to nonmedical debt.
    According to a recent report by the CFPB using this approach, about 
20 percent of credit reports include such ``medical collections,'' 
totaling approximately $88 billion. \1\ Other estimates use the same 
approach. \2\ These studies indicate that medical debt is not evenly 
distributed across the population, and a modest number of outliers are 
responsible for a heavily disproportionate share of total medical debt. 
The same studies find that higher medical debt is more likely among 
certain sub-groups of the population.
---------------------------------------------------------------------------
     \1\ CFPB, ``Medical Debt Burden in the United States (2022)'', at 
https://www.consumerfinance.gov/dataresearch/research-reports/medical-
debt-burden-in-the-united-states/.
     \2\ See, e.g., Raymond Kluender, et al. ``Medical Debt in the 
United States, 2009-2020''. 326 JAMA 250-256 (July 20, 2021), https://
jamanetwork.com/journals/jama/article-abstract/2782187 (estimate of 
$140 billion); Michael Batty, Christa Gibbs, and Benedic Ippolito. 
``Unlike Medical Spending, Medical Bills in Collections Decrease with 
Patients' Age'', 37 Health Affairs 1257-1264 (July 25, 2018), https://
www.healthaffairs.org/doi/full/10.1377/hlthaff.2018.0349 (estimate of 
$81 billion).
---------------------------------------------------------------------------
    There are several distinct problems with using this credit report-
based approach to determining the amount of medical debt--let alone 
evaluating whether there are any time trends in the total amount of 
medical debt.
    All of these studies are based on data from a single credit 
reporting agency, and all three employ the same definition of medical 
debt (i.e., a medical bill that is sent to collections). The first 
problem is that not all medical debt that is sent to collections is 
reported to all three credit reporting agencies--so reliance on a 
single agency will predictably miss at least some amount medical debt. 
The second problem is that not all medical debt is sent to 
collections--so reliance on collections data will predictably miss some 
medical debt as well. The third problem is that not all debt 
attributable to medical evaluation and treatment is reported as medical 
debt. For example, patients can pay some of their medical bills 
(including deductibles and copayments at the point of service) with a 
traditional credit card. Alternatively, they can use a credit card 
designed and marketed to cover health care expenses. \3\ Finally, they 
can tap other sources of funds, such as home equity loans, to pay 
medical bills. If any of these accounts ever go to collection, they 
will be treated by researchers as nonmedical debt. \4\ For all these 
reasons, research that relies on collections data will predictably 
underestimate total medical debt.
---------------------------------------------------------------------------
     \3\ For several examples of such products, see Bankrate, ``Best 
Credit Cards for Medical Expenses'', https://www.bankrate.com/finance/
credit-cards/should-you-have-a-medical-credit-card/.
     \4\ For a discussion of how such these strategies affect the 
amount of reported medical debt in the context of bankruptcy filings, 
see Melissa B. Jacoby and Mirya R. Holman, ``Managing Medical Bills on 
the Brink of Bankruptcy'', 10 Yale J. Health Pol'y L. Ethics 239 
(2010).
---------------------------------------------------------------------------
    An alternative approach relies on survey data. For example, Rae et 
al. (2022) use data from the U.S. Census Survey of Income and Program 
Participation (SIPP) to evaluate medical debt. \5\ They arrive at a 
much higher figure ($195 billion) than the studies based on credit 
reports. Surveys have their own issues involving validity, including 
whether the sample size is sufficient, and whether respondents can 
accurately recall and report information. For these reasons, Rae, et 
al. (2022), note that ``[t]he total amount of medical debt is difficult 
to estimate with any precision. While surveys capture a larger share of 
people and more types of medical debt than analysis of credit reports, 
there are challenges in capturing data from people who owe high levels 
of debt.'' \6\ That said, like the studies based on credit reports, 
Rae, et al. (2022), also find that medical debt is highly concentrated, 
with large sums owed by a relatively modest number of individuals: 
``0.3 percent of adults account for well more than half of the total 
medical debt.'' \7\
---------------------------------------------------------------------------
     \5\ Matthew Rae, et al., ``The Burden of Medical Debt in the 
United States'', KFF Issue Brief, Mar. 10, 2022, https://
www.healthsystemtracker.org/brief/the-burden-of-medical-debt-in-the-
united-states/ ($195 billion). Other researchers have used similar 
strategies. See, e.g., U.S. Census Bureau, ``Who Had Medical Debt in 
the United States?'' (Apr. 7, 2021), https://www.census.gov/library/
stories/2021/04/who-had-medical-debt-in-united-states.html; Liz Hamel, 
et al., ``The Burden of Medical Debt: Results From the Kaiser Family 
Foundation/New York Times Medical Bills Survey'', (Jan. 5, 2016), 
https://www.kff.org/health-costs/report/the-burden-of-medical-debt-
results-from-the-kaiser-family-foundation-new-york-times-medical-bills-
survey/; Robin A. Cohen and Jeannine S. Schiller, ``Problems Paying 
Medical Bills Among Persons Under Age 65: Early Release of Estimates 
From the National Health Interview Survey'', 2011-June 2015, National 
Center for Health Statistics; (Dec. 2015), https://www.cdc.gov/nchs/
data/nhis/earlyrelease/probs-paying-medical-bills-jan-2011-jun-
2015.pdf; Sara R. Collins, et al., ``Losing Ground: How the Loss of 
Adequate Health Insurance Is Burdening Working Families: Findings From 
the Commonwealth Fund Biennial Health Insurance Surveys'', 2001-2007, 
https://www.commonwealthfund.org/publications/fund-reports/2008/aug/
losing-ground-how-loss-adequate-health-insurance-burdening.
     \6\ Rae, et al., supra note 5.
     \7\ Id.
---------------------------------------------------------------------------
    To sum up, researchers have used various strategies to quantify 
medical debt, and have arrived at figures ranging from $81 billion to 
195 billion. This range of figures is the result of different 
methodological choices, data (un)availability, and definitional 
uncertainty.
Medical Debt Is a Function of Multiple Interactive Factors
    The amount of medical debt that is incurred is a function of the 
billed cost of care, less any discounts and payments (including 
insurance, charity care write-offs, and direct payment by the patient). 
This formula means the amount of medical debt incurred by any given 
patient is affected by multiple factors, including how much care they 
receive; the list price of the care that is rendered; whether the 
patient has insurance; whether the care is provided in-network or not; 
the ``generosity'' of applicable insurance coverage (i.e., how large 
the deductibles and copayments are); the ``generosity'' of provider 
charity care policies and whether they pursue patients for balance 
bills; and the amount of any payments made by the patient at the time 
of service.
    This list makes clear how many moving parts there are associated 
with any given episode of medical debt, as well as the potential 
interactions of each of those parts. For example, people who don't 
consume health care won't have medical debt, even if they don't have 
insurance--or have insurance with large copayments and deductibles. 
People who do consume health care but have ``rich'' insurance coverage 
(i.e., insurance with no copayments or deductibles) are unlikely to end 
up with material medical debt. Patients who receive care from a retail 
clinic are less likely to have material medical debt than those who 
always go to a hospital emergency department. Patients who receive care 
from in-network providers are less likely to end up with material 
medical debt than those who receive care from out-of-network providers. 
Patients who receive care from a hospital with a robust charity care 
policy are less likely to have material medical debt than those who 
receive care from a hospital that has a more restrictive charity care 
policy. Patients who receive care from a provider that does not balance 
bill are less likely to have material medical debt than those who 
receive care from a provider that aggressively seeks to collect balance 
bills. And so on.
Credit Reporting and Medical Debt
    Until recently, credit reporting agencies reported medical debt 
like any other form of debt. In the last week, Equifax, Experian, and 
Transunion have all announced changes in how they will handle medical 
debt. In general, these changes involve (i) deferring the reporting of 
medical debt that is in collections until a year has passed (for debt 
that exceeds $500); (ii) not reporting medical debt that is in 
collections if the amount owed is less than $500; and (iii) removing 
information on collection of medical debt from credit reports if the 
debt has been paid off. \8\
---------------------------------------------------------------------------
     \8\ Jessica Merrit, ``Most Medical Debt May Soon Vanish From 
Credit Reports'', U.S. News Money, Mar. 25, 2022, https://
money.usnews.com/credit-cards/articles/most-medical-debt-may-soon-
vanish-from-credit-reports.
---------------------------------------------------------------------------
    It remains to be seen how credit rating scores will be affected by 
these changes, or by other possible changes to credit reporting 
practices regarding medical debt. There are reasons to expect that 
individuals with modest medical debt may experience an increase in 
their credit rating, affecting their ability to obtain credit on 
favorable terms. Depending on the details of credit scoring and 
adjustments made in response to the elimination of most medical debt 
from credit reports, the increase in credit rating may be temporary. 
Alternatively, even if the credit rating bump is persistent, the 
meaning of any given credit score to issuers may change as well.
    There are likely to be other follow-on consequences as well. At the 
margin, changes in credit reporting may make some patients less willing 
to pay their medical bills. Nonhospital providers are likely to adapt 
by restricting available appointments to those who can pay in full at 
the time of service, or otherwise limiting access to care to patients 
unable to pay in full at the time of service--the very group of 
patients whom this change in credit reporting aims to help. \9\ I would 
also expect more consolidation on the delivery side of the market, as 
small groups and individual providers come under increasing financial 
pressure. There will doubtless be other unintended consequences.
---------------------------------------------------------------------------
     \9\ Hospitals that receive Medicare are subject to EMTALA, and may 
not deny evaluation and treatment based on insurance status or ability 
to pay.
---------------------------------------------------------------------------
Solving the Problem of Medical Debt
    Medical debt is a symptom of a larger problem--the American health 
care system is too expensive. Attempting to solve the problem of 
medical debt with tweaks to the credit reporting system is the 
equivalent of treating a symptom instead of the underlying disease.
    Congress has already taken a big step to address the problem of 
medical debt with the No Surprises Act, although disagreement about 
implementation has already resulted in litigation. \10\ There is no 
shortage of additional ideas on how to make health care less expensive, 
although there is considerable disagreement on which ideas are worth 
pursuing. One strategy that should not be controversial is ensuring 
nonprofit hospitals are providing sufficient charity care to justify 
the sizeable tax exemption they receive. \11\ Another strategy that 
should not be controversial is to encourage the use of lower-cost 
providers (including retail clinics and paraprofessionals) when the 
requisite services are within their scope of expertise. There is also 
considerable price variation among providers for a variety of shoppable 
medical services--creating obvious opportunities for lowering health 
care spending, as long as there is sufficient pricing transparency. 
\12\ I have spelled out other ideas for making American health care 
cheaper in my academic work and am happy to discuss those issues 
further if there is interest and time. \13\
---------------------------------------------------------------------------
     \10\ See Katie Keith, ``Court Sets Aside Key Parts of No Surprises 
Act Rule'', Health Aff. Feb. 24, 2022, https://www.healthaffairs.org/
do/10.1377/forefront.20220224.298748/.
     \11\ Ge Bai and David A. Hyman, ``Nonprofit Hospitals' Community 
Benefits Should Square With Their Tax Exemptions. They Often Don't'', 
StatNews (Feb. 17, 2022), https://www.statnews.com/2022/02/17/
nonprofit-hospitals-not-earning-tax-exemptions/; Ge Bai and David A. 
Hyman, ``Tax Exemptions for Nonprofit Hospitals: It's Time Taxpayers 
Get Their Money's Worth'', StatNews (Apr. 5, 2021), https://
www.statnews.com/2021/04/05/tax-exemptions-nonprofit-hospitals-bad-
deal-taxpayers/.
     \12\ John Jiang, Martin A. Makary, and Ge Bai, ``Commercial 
Negotiated Prices for CMS-Specified Shoppable Radiology Services in 
U.S. Hospitals'', 302 Radiology (Nov. 30, 2021), https://doi.org/
10.1148/radiol.2021211948. See also Melanie Evans, ``Some Hospitals 
Charge up to 10 Times More for Medical Scans Than Others, Study 
Finds'', Wall St. J. Nov. 30, 2021, https://www.wsj.com/articles/some-
hospitals-charge-up-to-10-times-more-for-medical-scans-than-others-
study-finds-11638284400.
     \13\ Charles Silver and David A. Hyman, ``Overcharged: Why 
Americans Pay Too Much for Health Care'' (Cato, 2018).
---------------------------------------------------------------------------
                                 ______
                                 
                PREPARED STATEMENT OF BERNETA L. HAYNES
              Staff Attorney, National Consumer Law Center
                             March 29, 2022
Summary
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee, thank you for inviting me to testify today regarding 
consumer medical debt. I offer my testimony here on behalf of the low-
income clients of the National Consumer Law Center. \1\
---------------------------------------------------------------------------
     \1\ This testimony was written by Berneta L. Haynes, with 
editorial review by Lauren Saunders, Carolyn Carter, April Kuehnhoff, 
and Jenifer Bosco. For further discussion and policy solutions, see 
Berneta Haynes, ``The Racial Health and Wealth Gap: Impact of Medical 
Debt on Black Families'', National Consumer Law Center (March 2022), 
available at https://www.nclc.org/images/pdf/medical-debt/RacialHealth-
Rpt-2022.pdf.
---------------------------------------------------------------------------
    The National Consumer Law Center is a nonprofit organization 
working for economic justice for low-income consumers and other 
vulnerable populations. We work with thousands of legal services, 
Government and private attorneys, as well as community groups and 
nonprofit organizations, from all States who represent low-income and 
older adults on consumer issues. As a result of our daily contact with 
these advocates, we have seen many examples of the damage wrought by 
medical debt. It is from this vantage point that we supply these 
comments.
    An alarming number of consumers struggle with medical bills in the 
United States, with medical debt representing more than half of all 
debts in collection. \2\ Black and Latino consumers, who are more 
likely to be uninsured and underinsured, carry significant medical 
debt. \3\ Among Black households, 27.9 percent carry medical debt, 
compared to 17.2 percent of White non-Hispanic households. \4\ 
Households in the South, the region with the highest concentration of 
Black people, carry more medical debt than households in the Midwest, 
West, and Northeast. Racial inequality underlies these disparities in 
medical debt.
---------------------------------------------------------------------------
     \2\ ``Medical Debt Burden in the United States'', Consumer 
Financial Protection Bureau (February 2022), available at https://
files.consumerfinance.gov/f/documents/cfpb-medical-debt-burden-in-the-
united-states-report-2022-03.pdf.
     \3\ Andre M. Perry, Joia Crear-Perry, Carl Romer, and Nana 
Adjeiwaa-Manu. ``The Racial Implications of Medical Debt: How Moving 
Toward Universal Health Care and Other Reforms Can Address Them''. 
Brookings Institution (Oct. 2021), available at https://
www.brookings.edu/research/the-racial-implications-of-medical-debt-how-
moving-toward-universal-health-care-and-other-reforms-can-address-them/
. See also Neil Bennett, Jonathan Eggleston, Laryssa Mykyta, and Briana 
Sullivan, ``19 Percent of U.S. Households Could Not Afford To Pay for 
Medical Care Right Away''. United States Census Bureau, 2021, available 
at https://www.census.gov/library/stories/2021/04/who-had-medical-debt-
in-united-states.html.
     \4\ Neil Bennett, Jonathan Eggleston, Laryssa Mykyta, and Briana 
Sullivan. ``19 Percent of U.S. Households Could Not Afford To Pay for 
Medical Care Right Away''. United States Census Bureau, 2021, available 
at https://www.census.gov/library/stories/2021/04/who-had-medical-debt-
in-united-states.html. Households in the South, the region with the 
highest concentration of Black people, also carry more debt than 
households in the Midwest, West, and Northeast.
---------------------------------------------------------------------------
    Recently, the Big Three credit bureaus (Equifax, Experian, and 
TransUnion) announced changes to how they will report medical debt; the 
changes will result in the removal of nearly 70 percent of medical 
bills from credit reports. \5\ When medical bills go unpaid and end up 
reported to credit bureaus, it harms consumer credit scores \6\ that 
increasingly have become important for obtaining employment, housing, 
and other financial products. As a result, medical debt can lead to 
long-term financial insecurity. For this reason, more work is necessary 
to remove all medical debts from credit reports.
---------------------------------------------------------------------------
     \5\ On March 18, 2022, the Big Three credit bureaus (Equifax, 
Experian, and TransUnion) announced changes to how they report medical 
debt; the changes will result in the removal of nearly 70 percent of 
medical bills from credit reports. See Anna Maria Andriotis, ``Most 
Medical Debts To Be Removed From Consumers' Credit Reports'', Wall 
Street Journal (March 18, 2022), available at https://www.wsj.com/
articles/most-medical-debts-to-be-removed-from-consumers-credit-
reports-11647604803?reflink=desktopwebshare-permalink.
     \6\ Michael Best, Jenifer Bosco, and Chi Chi Wu. ``Don't Add 
Insult to Injury: Medical Debt and Credit Reports'', NCLC (November 
2019), available at https://www.nclc.org/images/pdf/debt-collection/
report-dont-add-insult-nov2019.pdf.
---------------------------------------------------------------------------
    Because medical debt brings with it the threat of aggressive 
collection practices, many individuals take risky measures to avoid 
medical debt collection. Individuals often drain their short-term 
savings, increase their credit card debt, \7\ or dip into long-term 
savings accounts (retirement or college funds) to pay off burdensome 
medical bills. \8\ Families sometimes turn to deceptive financial 
products, such as medical credit cards \9\ and risky high-interest 
small-dollar loans to pay medical bills. \10\ In a recent survey by the 
American Cancer Society, 7 percent of respondents reported taking out a 
loan to pay their medical debt. \11\ As such, medical debt can show up 
as other types of debt in individual credit histories.
---------------------------------------------------------------------------
     \7\ ``The median credit card balance from health expenditures 
among African American middle class households that carry the expense 
on their credit card is $933. The median indebted African American 
household with medical debt on their credit cards carries 11 percent of 
their total credit card debt due to medical expenses.'' See Catherine 
Ruetschlin and Dedrick Asante-Muhammad. ``The Challenge of Credit Card 
Debt for the African American Middle Class''. Demos and NAACP (Dec. 
2013), available at http://www.demos.org/sites/default/files/
publications/CreditCardDebt-Demos-NAACP-0.pdf.
     \8\ This is true for uninsured and insured individuals alike. See 
Hamel, Liz, et al. ``The Burden of Medical Debt: Results From the 
Kaiser Family Foundation/New York Times Medical Bills Survey''. Kaiser 
Family Foundation (Jan. 2016), available at https://www.kff.org/report-
section/the-burden-of-medical-debt-section-1-who-has-medical-bill-
problems-and-what-are-the-contributing-factors/.
     \9\ National Consumer Law Center, Collection Actions (5th ed. 
2020), 9.4.4.1, updated at https://library.nclc.org/node/
2436706?s=care%20credit. In 2021, the Consumer Financial Protection 
Bureau received complaints against medical credit card companies for a 
variety of reasons, including overcharge of interest and lack of notice 
of fees, conditions, or contract terms.
     \10\ Hamel, Liz, et al. ``The Burden of Medical Debt: Results From 
the Kaiser Family Foundation/New York Times Medical Bills Survey''. 
Kaiser Family Foundation (Jan. 2016), available at https://www.kff.org/
report-section/the-burden-of-medical-debt-section-1-who-has-medical-
bill-problems-and-what-are-the-contributing-factors/.
     \11\ Four percent of respondents indicated they took out a payday 
loan or refinanced their home to pay medical bills. See ``Survivor 
Views: Cancer and Medical Debt'', American Cancer Society (Feb. 2022), 
available at https://www.fightcancer.org/sites/default/files/national-
documents/survivor-views-cancer-debt-0.pdf.
---------------------------------------------------------------------------
    Hospitals and other medical providers frequently place accounts 
with third-party collectors, who may use frequent calls and other 
communications to pressure consumers to pay. Black people in particular 
are more likely to be contacted by debt collectors over medical debt. 
In fact, debt collectors contact Black households at twice the rate of 
White households, according to the Urban Institute. \12\ The Federal 
Trade Commission found that areas where the Black population is 50 
percent or more have a higher rate of debt collection complaints 
compared to areas that are majority nonblack. \13\ Despite the credit 
and collection protections under the Affordable Care Act (ACA), the 
Fair Debt Collection Practices Act (FDCPA), and various State-based 
protections, aggressive debt collection remains a looming problem, and 
medical debt is one of the leading triggers of experiences with debt 
collectors.
---------------------------------------------------------------------------
     \12\ Michael Karpman, et al. ``The Well Being and Basic Needs 
Survey: A New Data Source for Monitoring the Health and Well-Being of 
Individuals and Families'', Urban Institute (Aug. 28, 2018), available 
at https://www.urban.org/sites/default/files/publication/98919/the-
well-being-and-basic-needs-survey-1.pdf. See also National Consumer Law 
Center, Fair Debt Collection (10th ed. 2022), 1.3.1.5, updated at 
https://library.nclc.org/fdc/01030105-0.
     \13\ Despite similar rates of default and late payments, 71 
percent of Black middle-income households received calls from debt 
collectors compared to 50 percent of White middle-income households. 
See Catherine Ruetschlin and Dedrick Asante-Muhammad. ``The Challenge 
of Credit Card Debt for the African American Middle Class''. Demos and 
NAACP (Dec. 2013), available at http://www.demos.org/sites/default/
files/publications/CreditCardDebt-Demos-NAACP-0.pdf. See also Raval 
Devesh. ``Which Communities Complain to Policymakers? Evidence From 
Consumer Sentinel''. Federal Trade Commission (July 2018), 20, 
available at https://www.ftc.gov/system/files/documents/reports/which-
communities-complain-policymakers-evidence-consumer-sentinel/working-
paper-336.pdf.
---------------------------------------------------------------------------
    In some cases, medical providers file collection lawsuits on 
alleged medical debts. Once they obtain a judgment, providers may be 
able to use a variety of collection tools (depending on State law), 
including: seeking liens on homes, wage garnishment, tax refund 
garnishment, attachment and seizure of bank accounts, and even going so 
far as to seek civil arrest warrants when debtors fail to show up for 
court proceedings. For example, a recent investigation by Kaiser Health 
News revealed that the University of Virginia Hospital system has a 
history of relying on property liens to collect unpaid medical bills. 
\14\ As a result of the investigation, the system announced in 2021 
that it would cancel decades of liens placed on low-income patients for 
unpaid medical bills. \15\ Between 2009 and 2018, hospitals in Maryland 
filled nearly 40,000 lawsuits that resulted in wage garnishment, often 
from their own employees. \16\ Furthermore, the ACLU documented cases 
of arrests for medical debts in several States, including Maryland, 
Arkansas, and Tennessee. \17\
---------------------------------------------------------------------------
     \14\ Jay Hancock. ``UVA Health Still Squeezing Money From 
Patients--By Seizing Their Home Equity'', Kaiser Health News (Oct. 19, 
2020), available at https://khn.org/news/uva-health-property-liens-
patient-medical-debt/.
     \15\ Jay Hancock. ``UVA Health Will Wipe Out Tens of Thousands of 
Lawsuits Against Patients'', Kaiser Health News (April 20, 2021), 
available at https://khn.org/news/article/uva-health-will-wipe-out-
tens-of-thousands-of-lawsuits-against-patients/.
     \16\ ``Preying on Patients: Maryland's Not-for-Profit Hospitals 
and Medical Debt Lawsuits''. National Nurses United (Feb. 2020), 9, 17, 
available at https://www.nationalnursesunited.org/preying-on-patients.
     \17\ ``A Pound of Flesh: The Criminalization of Private Debt''. 
American Civil Liberties Union (2018), 45, available at https://
www.aclu.org/sites/default/files/field_document/022118-debtreport.pdf.
---------------------------------------------------------------------------
Recommendations
    To address the epidemic of medical debt, policy advocates and 
lawmakers should focus on ways to prevent medical debt at the outset, 
not after the fact, to protect consumers from harmful debt collection 
practices and long-term impacts on their
financial wellbeing. Policymakers also should provide consumer 
protections that address the racial disparities in medical debt. The 
following solutions would go a long way toward addressing the medical 
debt crisis:

    Strengthen Protections Against Aggressive Debt Collection. 
        Prohibit aggressive debt collection by banning wage 
        garnishment, bank account seizure, property liens, foreclosure 
        of homes based on medical debt liens, and civil arrest warrants 
        (also referred to as body attachments or capias warrants) for 
        medical debt.

    Prohibit Collection of Medical Debt During Health Insurance 
        Appeals. Require debt collectors to cease collection of alleged 
        medical debts when they are advised that a health insurance 
        appeal is pending or otherwise informed that the consumer is 
        seeking to resolve the account with the insurer.

    Crack Down on Third-Party Debt Collection. End the practice 
        of turning over medical debt to third-party collection 
        agencies.

    Protect Patient Credit Reports. Prohibit providers and debt 
        collectors from reporting all medical debt to credit reporting 
        bureaus. \18\ Short of total prohibition, exclude disputed debt 
        and require screening for financial assistance.
---------------------------------------------------------------------------
     \18\ To date, Minnesota is the only State that prohibits hospitals 
and debt collectors from reporting medical debts to credit bureaus. For 
a discussion, see Michael Best, Jenifer Bosco, and Chi Chi Wu. ``Don't 
Add Insult to Injury: Medical Debt and Credit Reports''. National 
Consumer Law Center (Nov. 2019), available at https://www.nclc.org/
images/pdf/debt-collection/report-dont-add-insult-nov2019.pdf.

    Improve Protection of Funds Needed for Necessities for All 
        Types of Debt. As medical debt is often converted into credit 
        card and other types of debt, we sorely need to increase the 
        Federal protection against wage garnishment and to adopt a new 
        Federal protection for a base amount of funds in bank accounts. 
        \19\ Currently, under Federal law, only $217.50/week in wages 
        are fully protected--not even the poverty level, and there is 
        no general Federal protection for bank accounts; in many 
        States, collectors can completely empty out bank accounts. \20\
---------------------------------------------------------------------------
     \19\ See NCLC, ``A Free Stimulus To Support Struggling Families 
and the Economy: First Suspend, Then Reform, Wage and Bank Account 
Garnishment'' (Jan. 2021), http://bit.ly/Wage-Garnish-Stimulus-2021; 
Center for Responsible Lending, ``Protect Against Abusive Debt 
Collection: Working Families Need Wage Protection and a Chance to 
Save'' (Feb. 2021), https://www.responsiblelending.org/sites/default/
files/nodes/files/research-publication/crl-garnishment-memo-
feb2021.pdf.
     \20\ See NCLC, ``No Fresh Start in 2021: Will States Let Debt 
Collectors Push Families Into Poverty as Pandemic Protections Expire?'' 
(Nov. 2021), https://www.nclc.org/issues/report-still-no-fresh-
start.html.

    Please see the attached reports and materials for more policy 
recommendations to protect people from burdensome medical debt: The 
Racial Health and Wealth Gap: Impact of Medical Debt on Black Families 
\21\ and NCLC's recent letter to the CFPB regarding medical debt.
---------------------------------------------------------------------------
     \21\ Berneta Haynes, ``The Racial Health and Wealth Gap: Impact of 
Medical Debt on Black Families'', National Consumer Law Center (March 
2022), available at https://www.nclc.org/images/pdf/medical-debt/
RacialHealth-Rpt-2022.pdf. See also Chi Chi Wu, Jenifer Bosco, and 
April Kuehnhoff. ``Model Medical Debt Protection Act'', National 
Consumer Law Center (September 2019), available at https://
www.nclc.org/images/pdf/medical-debt/model-medical-debt-protection-act-
082017.pdf.
---------------------------------------------------------------------------
Conclusion
    Issues related to medical debt cut across a variety of areas of 
financial regulation (credit reporting, debt collection, and regulation 
of lending products, etc.), and thus the solutions must be broad and 
cross-cutting. Urgent policy solutions are needed to reduce consumer 
medical debt and ensure that health care never throws anyone into a 
cycle of financial insecurity.
    Thank you for the opportunity to testify today. I would be happy to 
answer your questions.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                 RESPONSES TO WRITTEN QUESTIONS
           OF SENATOR MENENDEZ FROM BERNETA L. HAYNES

Q.1. Removing cleared medical debt from consumer credit reports 
is a good first step, but as the sheer amount of medical debt 
indicates, it isn't so easy for families to clear up their 
medical debt.
    What are some of the challenges people face in trying to 
clear their medical debt?

A.1. As discussed in my written testimony, \1\ consumers trying 
to clear their medical debt face significant challenges, 
including lack of disposable income or savings to pay the 
debts, obstacles accessing charity care, and harassment and 
aggressive behavior from debt collectors.
---------------------------------------------------------------------------
     \1\ Testimony of Berneta L. Haynes on ``Economic Impact of the 
Growing Burden of Medical Debt'' before the United States Senate 
Committee on Banking, Housing, and Urban Affairs, Mar. 29, 2022, 
available at https://www.banking.senate.gov/imo/media/doc/Haynes%20
Testimony%203-29-22.pdf.
---------------------------------------------------------------------------
    As the Consumer Financial Protection Bureau (CFPB) has 
indicated, medical debt disproportionately impacts lower-income 
consumers, \2\ individuals who are less likely to have 
emergency savings or disposable income to weather a medical 
bill. The Kaiser Family Foundation reported that consumers with 
medical bills are less likely than those without medical bills 
to have a checking or savings account, a retirement account of 
any kind, or any type of investments or stocks. \3\ 
Furthermore, these consumers often reported loss of income due 
to illness. \4\ In an effort to clear their medical bills, 
these consumers may turn to deceptive and risky financial 
alternatives (credit cards, high-interest small-dollar loans, 
medical credit cards, \5\ etc.), taking an already precarious 
financial situation from bad to worse. \6\
---------------------------------------------------------------------------
     \2\ ``Medical Debt Burden in the United States'', Consumer 
Financial Protection Bureau (February 2022), p. 15, available at 
https://files.consumerfinance.gov/f/documents/cfpb-medical-debt-burden-
in-the-united-states-report-2022-03.pdf.
     \3\ Hamel, Liz, et al. ``The Burden of Medical Debt: Results From 
the Kaiser Family Foundation/New York Times Medical Bills Survey''. 
Kaiser Family Foundation (Jan. 2016), available at https://www.kff.org/
report-section/the-burden-of-medical-debt-section-1-who-has-medical-
bill-problems-and-what-are-the-contributing-factors/.
     \4\ Id.
     \5\ National Consumer Law Center, Collection Actions (5th ed. 
2020), 9.4.4.1, updated at https://library.nclc.org/node/
2436706?s=care%20credit.
     \6\ This is true for uninsured and insured individuals alike. See 
Hamel, Liz, et al. ``The Burden of Medical Debt: Results From the 
Kaiser Family Foundation/New York Times Medical Bills Survey''. Kaiser 
Family Foundation (Jan. 2016), available at https://www.kff.org/report-
section/the-burden-of-medical-debt-section-1-who-has-medical-bill-
problems-and-what-are-the-contributing-factors/.
---------------------------------------------------------------------------
    Ideally, charity care or FAPs should help protect some 
uninsured or underinsured patients from burdensome medical 
debt. In practice, however, these programs fall short as many 
hospitals do the bare minimum to satisfy the Affordable Care 
Act's (ACA) requirements for their tax-exempt status. Charity 
care policies fall short for several reasons:

    Hospitals fail to inform patients of their 
        eligibility for charity care before commencing debt 
        collection; \7\
---------------------------------------------------------------------------
     \7\ Jordan Rau. ``Patients Eligible for Charity Care Instead Get 
Big Bills''. Kaiser Health News (Oct. 14, 2019), available at https://
khn.org/news/patients-eligible-for-charity-care-instead-get-big-bills/.

    Lack of specific guidelines and minimum eligibility 
        criteria in the ACA's FAP requirements; \8\
---------------------------------------------------------------------------
     \8\ 26 CFR 1.501(r)-4. See also Jordan Rau. ``Patients Eligible 
for Charity Care Instead Get Big Bills''. Kaiser Health News (Oct. 14, 
2019), available at https://khn.org/news/patients-eligible-for-charity-
care-instead-get-big-bills/.

    Gaps in hospital FAPs, which exclude many 
---------------------------------------------------------------------------
        providers; and

    Overall lack of effective implementation, 
        enforcement, and oversight of charity care programs.

    Patients struggle to access charity either due to lack of 
information, narrow eligibility guidelines, and onerous 
application or documentation requirements. Lack of enforcement 
and oversight, lack of notice to patients, and lack of specific 
Federal guidelines and minimum eligibility requirements for 
hospital charity care programs all snowball to limit the 
effectiveness of the ACA's efforts to reduce the medical debt 
burden and help people clear their medical bills.
    As the debt lingers, patients face aggressive debt 
collectors, \9\ which can lead to wage garnishment, seizure of 
bank accounts, and even liens against property. Medical debt is 
consistently the most common type of past-due bill about which 
consumers reported being contacted by debt collectors. \10\ To 
avoid aggressive debt collection, individuals lucky enough to 
have any short-term or long-term savings accounts often drain 
their savings to pay off burdensome medical bills. \11\ As 
noted, families sometimes turn to deceptive financial products 
that can worsen their financial situation. \12\ In effect, the 
risky measures families often take to clear a medical debt and 
avoid debt collection further trap them in a cycle of financial 
insecurity.
---------------------------------------------------------------------------
     \9\ In 2022, the Consumer Financial Protection Bureau reported 
that 58 percent of bills in collections and on people's credit records 
were medical bills in the second quarter of 2021. ``Medical Debt Burden 
in the United States'', Consumer Financial Protection Bureau (February 
2022), available at https://files.consumerfinance.gov/f/documents/
cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf. See 
also ``Consumer Experiences with Debt Collection: Findings from the 
CFPB's Survey of Consumer Views on Debt''. Consumer Financial 
Protection Bureau (Jan. 2017), 5, 21, available at https://
files.consumerfinance.gov/f/documents/201701_cfpb_Debt-Collection-
Survey-Report.pdf (finding Medical debt, credit card debt, and student 
debt led the list of types of debt that led to interaction with debt 
collectors).
     \10\ ``Consumer Experiences With Debt Collection: Findings From 
the CFPB's Consumer Survey of Consumer Views on Debt'', Consumer 
Financial Protection Bureau (January 2017), p. 5, available at 
201701_cfpb_Debt-Collection-Survey-Report.pdf.
     \11\ Hamel, Liz, et al. ``The Burden of Medical Debt: Results From 
the Kaiser Family Foundation/New York Times Medical Bills Survey''. 
Kaiser Family Foundation (Jan. 2016), available at https://www.kff.org/
report-section/the-burden-of-medical-debt-section-1-who-has-medical-
bill-problems-and-what-are-the-contributing-factors/.
     \12\ Hamel, Liz, et al. ``The Burden of Medical Debt: Results From 
the Kaiser Family Foundation/New York Times Medical Bills Survey''. 
Kaiser Family Foundation (Jan. 2016), available at https://www.kff.org/
report-section/the-burden-of-medical-debt-section-1-who-has-medical-
bill-problems-and-what-are-the-contributing-factors/.

Q.2. One in four Millennials and Gen-Z members with medical 
debt skipped rent or mortgage payments because of their debt. 
Those missed payments can negatively affect their credit score 
for years.
    What are some other ways that medical debt can have a 
lasting effect on credit scores? What can be done to mitigate 
or expunge these secondary effects?

A.2. As discussed above, to manage their medical debt, patients 
often put medical bills on credit cards, take out risky high-
interest loans, and turn to medical credit cards, all of which 
can harm their credit scores and increase the likelihood of 
bankruptcy. According to the CFPB, patients can sometimes see 
significant drops in their credit scores due to small unpaid 
medical debts. \13\ One consumer reported to the CFPB that she 
saw her credit score drop 94 points due to an unpaid medical 
debt of about $120. \14\ Worse yet, consumers reported only 
finding out a medical debt had affected their credit report 
when they were in the process of making a major purchase. For 
example, one consumer stated that when she was trying to buy a 
house she found out about a medical debt that had harmed her 
score. \15\ To address this issue, the CFPB issued Regulation F 
in 2020 (effective November 30, 2021), requiring debt 
collectors to notify consumers before reporting the debt to a 
credit reporting agency. Moreover, even after a consumer has 
paid to have a medical debt removed from their credit report, 
it may continue to harm their credit score; some changes 
recently announced by the major credit bureaus include removing 
paid medical debts from credit reports. \16\
---------------------------------------------------------------------------
     \13\ Consumer Financial Protection Bureau. ``Complaint Bulletin: 
Medical Billing and Collection Issues in Consumer Complaints'', April 
2022, p. 18, available at https://files.
consumerfinance.gov/f/documents/cfpb_complaint-bulletin-medical-
billing_report_2022-04.pdf.
     \14\ Consumer Financial Protection Bureau. ``Complaint Bulletin: 
Medical Billing and Collection Issues in Consumer Complaints'', April 
2022, p. 18, available at https://files.consumerfinance.gov/f/
documents/cfpb_complaint-bulletin-medical-billing_report_2022-04.pdf.
     \15\ Consumer Financial Protection Bureau. ``Complaint Bulletin: 
Medical Billing and Collection Issues in Consumer Complaints'', April 
2022, p. 22, available at https://files.consumerfinance.gov/f/
documents/cfpb_complaint-bulletin-medical-billing_report_2022-04.pdf.
     \16\ See Consumer Financial Protection Bureau. ``Complaint 
Bulletin: Medical Billing and Collection Issues in Consumer 
Complaints'', April 2022, p. 23, available at https://
files.consumerfinance.gov/f/documents/cfpb_complaint-bulletin-medical-
billing_report_2022-04.pdf, citing a consumer who paid to have a 
medical debt removed, but it was never removed and the debt continued 
affecting their credit score, preventing them from obtaining a 
mortgage.
---------------------------------------------------------------------------
    Consumers may file bankruptcy due to medical debt. In a 
recent survey of bankruptcy filers between 2013 and 2016, most 
respondents indicated medical debt as a reason for their 
bankruptcy. \17\ Bankruptcy may impact credit scores for up to 
10 years, as limited by the Fair Credit Reporting Act. \18\ 
This is particularly troubling because credit scores 
increasingly have become important for obtaining employment, 
housing, and other financial products. \19\
---------------------------------------------------------------------------
     \17\ Himmelstein, et al. ``Medical Bankruptcy: Still Common 
Despite the Affordable Care Act'', American Journal of Public Health 
(March 2019), available at https://ajph.apha
publications.org/doi/abs/10.2105/AJPH.2018.304901.
     \18\ ``Medical Debt Burden in the United States'', Consumer 
Financial Protection Bureau (February 2022), p. 28-29, available at 
https://files.consumerfinance.gov/f/documents/cfpb-medical-debt-burden-
in-the-united-states_report_2022-03.pdf.
     \19\ Michael Best, Jenifer Bosco, and Chi Chi Wu. ``Don't Add 
Insult to Injury: Medical Debt and Credit Reports'', NCLC (November 
2019), available at https://www.nclc.org/images/pdf/debt_collection/
report-dont-add-insult-nov2019.pdf.
---------------------------------------------------------------------------
    Recently, the Big Three credit bureaus (Equifax, Experian, 
and TransUnion) announced changes to how they will report 
medical debt. \20\ The credit bureaus announced that, beginning 
in July, they will remove medical debt that has been paid off. 
After March 2023, they will remove unpaid medical debt less 
than $500. Going forward, they will wait a full year before 
adding new unpaid medical debts to credit reports. These 
changes will remove nearly 70 percent of medical debt from 
credit reports, helping many of the 15 percent \21\ of 
Americans with medical debt on their credit report and 
mitigating some of the harm to credit scores. But the remaining 
30 percent of medical debt on credit reports will continue to 
harm the most vulnerable consumers, such as those facing 
catastrophic illness who cannot afford to pay. It will 
disproportionately impact consumers of color. Data from the 
Urban Institute shows that the median medical debt Americans 
have in collections is $797, and $854 among non-White 
communities. \22\ Individuals with more than $500 in medical 
debt, many of them non-White, will still see medical debt on 
their credit reports. More needs to be done to protect the 
consumers, disproportionately non-White, who will not be 
covered by these changes.
---------------------------------------------------------------------------
     \20\ ``Consumer Advocates Cheer Removal of Most Medical Debt From 
Credit Reports'', National Consumer Law Center (March 18, 2022), 
available at https://www.nclc.org/media-center/consumer-advocates-
cheer-removal-of-most-medical-debt-from-credit-reports.html.
     \21\ ``Debt in America: An Interactive Map''. Urban Institute 
(Dec. 2020), available at https://apps.urban.org/features/debt-
interactive-map/?type=medical&variable=perc_debt_med.
     \22\ Id.
---------------------------------------------------------------------------
    For this reason, Congress needs to act to protect patient 
credit scores from medical debt. Specifically, Congress should 
ban providers and debt collectors from reporting medical debt 
for medically necessary services to credit reporting bureaus. 
At a minimum, Congress or the States should codify the reforms 
by the three major credit bureaus to limit providers and debt 
collectors from reporting medical debts to credit bureaus until 
one year has passed after the initial billing. The CFPB and FTC 
should strengthen Regulation F, including investigating 
compliance with Regulation F notice requirements, to ensure 
that consumers receive notices from debt collectors before 
credit reporting.

Q.3. A study from Johns Hopkins found that 26 of the 100 
hospitals with the highest revenue, many of which are nonprofit 
or Government run, filed nearly 39,000 court actions against 
patients from 2018 to 2020. These actions include lawsuits, 
wage garnishments, and personal property liens.
    What can be done to combat the use of abusive debt 
collection practices by hospitals?

A.3. Although the ACA and FDCPA provide important protections 
against debt collection, aggressive debt collection practices 
remain a problem, especially for consumers with medical debt. 
Consumers struggling with unpaid medical bills face a range of 
troubling debt collection practices that affect everything from 
their finances to their housing and physical freedom.
    To collect unpaid medical debts, hospitals and other 
medical providers often place accounts with third-party 
collectors who may use frequent calls and other communications 
to pressure consumers to pay. These aggressive debt collection 
practices disproportionately affect communities of color and 
Black people, who are more likely than Whites to have medical 
debt in collections \23\ and experience contact with debt 
collectors. \24\ Additionally, some medical providers file 
collection lawsuits on alleged medical debts. Once they obtain 
a judgment, providers may be able to use a variety of 
collection tools (depending on State law), including seeking 
liens on homes, wage garnishment, tax refund garnishment, 
attachment and seizure of bank accounts, and even going so far 
as to seek civil arrest warrants when debtors fail to show up 
for court proceedings. Here is a quick glance at the problem:
---------------------------------------------------------------------------
     \23\ Signe-Mary McKernan, Steven Brown, and Genevieve M. Kenney. 
``Past-Due Medical Debt a Problem, Especially for Black Americans''. 
Urban Institute, 2017, available at www.urban.org/urban-wire/past-due-
medical-debt-problem-especially-black-americans. See also ``Debt in 
America: An Interactive Map''. Urban Institute (Dec. 2020), available 
at https://apps.urban.org/features/debt-interactive-map/
?type=medical&variable=perc_debt_med.
     \24\ Michael Karpman, et al. ``The Well Being and Basic Needs 
Survey: A New Data Source for Monitoring the Health and Well-Being of 
Individuals and Families'', Urban Institute (Aug. 28, 2018), available 
at https://www.urban.org/sites/default/files/publication/98919/
the_well-being_and_basic_needs_survey_1.pdf.

    Nonprofit hospitals, \25\ the very hospitals 
        subject to the ACA's restrictions against 
        ``extraordinary collection actions,'' filed the most 
        lawsuits against patients between 2018 and 2020. \26\
---------------------------------------------------------------------------
     \25\ ``Hospitals by Ownership Type''. Kaiser Family Foundation, 
available at https://www.kff.org/bf5afc7/.
     \26\ Michelle McGhee and Will Chase. ``How America's Top Hospitals 
Hound Patients With Predatory Billing''. Axios, Johns Hopkins 
University, available at https://www.axios.com/hospital-billing.

    Even at the onset of the COVID-19 pandemic when 
        States declared public health emergencies, some 
        hospitals continued suing patients for unpaid medical 
        bills, going as far as seeking liens against patients' 
        homes. \27\ In New York, nonprofit hospitals secured 
        4,880 liens in 2017 and 2018 on homes of patients who 
        had unpaid medical bills. \28\
---------------------------------------------------------------------------
     \27\ Froedtert Health System in Milwaukee filed more than 100 
lawsuits from mid-March through July, after the Governor declared a 
public health emergency on March 12, 2020. See Jenny Deam. ``Some 
Hospitals Kept Suing Patients Over Medical Debt Through the Pandemic''. 
ProPublica (June 14, 2021), available at https://www.propublica.org/
article/some-hospitals-kept-suing-patients-over-medical-debt-through-
the-pandemic.
     \28\ Elisabeth R. Benjamin and Amanda Dunker. ``Discharged Into 
Debt: Nonprofit Hospitals File Liens on Patients' Homes'', Community 
Service Society (November 2021), available at https://www.cssny.org/
publications/entry/discharged-into-debt-nonprofit-hospitals-file-liens-
on-patients-homes.

    Between 2009 and 2018, hospitals in Maryland filed 
        nearly 40,000 lawsuits that resulted in wage 
        garnishment, often from their own employees. \29\
---------------------------------------------------------------------------
     \29\ ``Preying on Patients: Maryland's Not-for-Profit Hospitals 
and Medical Debt Lawsuits''. National Nurses United (Feb. 2020), 9, 17, 
available at https://www.nationalnursesunited.org/preying-on-patients.

    The ACLU documented cases of arrests for medical 
        debts in several States, including Maryland, Arkansas, 
        and Tennessee. \30\ In Maryland, they observed a 
        practice of patients being jailed for medical debts of 
        less than $1,000. \31\
---------------------------------------------------------------------------
     \30\ ``A Pound of Flesh: The Criminalization of Private Debt''. 
American Civil Liberties Union (2018), 45, available at https://
www.aclu.org/sites/default/files/field_document/022118-debtreport.pdf.
     \31\ ``A Pound of Flesh: The Criminalization of Private Debt''. 
American Civil Liberties Union (2018), 45, available at https://
www.aclu.org/sites/default/files/field_document/022118-debtreport.pdf 
(``including cases in which people were arrested in cases involving 
debts of $217.50 and $230 owed to an addiction service provider'').

    Some States have taken steps during the past few years to 
address aggressive medical debt billing practices. In 2021, 
Maryland passed the Medical Debt Protection Act, which 
prohibits hospitals from requesting arrest warrants against 
patients and from requesting a lien against a patient's home; 
the Act also protects patients eligible for financial 
assistance against wage garnishment and adverse credit 
reporting. \32\ Similarly, Nevada's Medical Debt Protection Act 
that passed in 2021 prohibits a collection agency from taking 
civil actions for medical debts of less than $10,000 or 
charging fees of more than 5 percent of the debt, and requires 
60-day notification to the patient before a collection agency 
can take debt collection actions. \33\ These laws, as well as 
similar legislation passed in New Mexico \34\ and California 
\35\ in 2021, are great starting points and illustrate what 
legislators can do to solve the problem of aggressive medical 
debt collection. At the Federal level, Congress should:
---------------------------------------------------------------------------
     \32\ See Senate Bill 514, available at http://mgaleg.maryland.gov/
2021RS/bills/sb/sb0514T.pdf. See also House Bill 565, available at 
http://mgaleg.maryland.gov/2021RS/fnotes/bil_0005/hb0565.pdf.
     \33\ See Senate Bill 248, available at https://
www.leg.state.nv.us/App/NELIS/REL/81st2021/Bill/7770/Text. The 
collector can still sue in small claims court, limiting the value of 
this provision.
     \34\ The protections are enforced by the State attorney general 
and patients may file a complaint against a health care facility, 
third-party provider, or medical creditor that violates a provision of 
the law. See Senate Bill 71, available at https://www.nmlegis.gov/
Legislation/Legislation?Chamber=S&LegType=B&LegNo=71&year=21. See also 
``New Mexico Patients' Debt Collection Practices Act Signed by 
Governor''. ACA International (Apr. 7, 2021), available at https://
www.acainternational.org/news/new-mexico-patients-debt-collection-
practices-act-signed-by-governor/.
     \35\ See AB 1020, available at https://leginfo.legislature.ca.gov/
faces/billStatusClient.xhtml?
bill_id=202120220AB1020.

    Strengthen Protections Against Aggressive Debt 
        Collection. Prohibit aggressive debt collection (or 
        ``extraordinary collection actions'') by banning wage 
        garnishment, bank account seizure, property liens, 
        foreclosure of homes based on medical debt liens, and 
---------------------------------------------------------------------------
        civil arrest warrants for medical debt.

    Protect Patient Credit Reports. Pass H.R. 2537 \36\ 
        and H.R. 2547, \37\ prohibiting providers and debt 
        collectors from reporting medical debts for medically 
        necessary procedures to credit reporting bureaus. At a 
        minimum, Congress should pass companion bills H.R. 773 
        \38\ and S. 214, \39\ which would codify the reforms 
        announced by the three major credit bureaus.
---------------------------------------------------------------------------
     \36\ See H.R. 2537 (Rep. Tlaib), Consumer Protection for Medical 
Debt Collections Act, available at https://www.congress.gov/bill/117th-
congress/house-bill/2537.
     \37\ See H.R. 2547 (Rep. Waters), Comprehensive Debt Collection 
Improvement, available at https://www.congress.gov/bill/117th-congress/
house-bill/2547.
     \38\ See H.R. 733 (Rep. Porter), Medical Debt Relief Act of 2021, 
available at https://www.congress.gov/bill/117thcongress/house-bill/
773.
     \39\ See S. 214 (Sen. Merkley), Medical Debt Relief Act of 2021, 
available at https://www.congress.gov/bill/117thcongress/senate-bill/
214. See also S. 355 (Sen. Van Hollen), COVID-19 Medical Debt 
Collection Relief Act of 2021, available at https://www.congress.gov/
bill/117th-congress/senate-bill/355.

    Cancel Medical Debt and Pass Single-Payer Universal 
---------------------------------------------------------------------------
        Health Care.

      Discharge medical debt incurred through care at 
        facilities operated by the Federal Government, 
        including U.S. Department of Veterans Affairs hospitals 
        and clinics, as well as hospitals run by the Department 
        of Defense and the Department of Health and Human 
        Services. For privately held medical debt (debt 
        incurred for care at nonprofit and for-profit 
        facilities), the Federal Government should purchase 
        medical debt from debt collectors and health care 
        providers at discounted rates (avoiding a financial 
        windfall for debt collectors) and discharge these 
        debts.

      Enact a universal publicly funded national 
        single-payer health plan administered at the State and 
        local levels, with comprehensive lifetime benefits, 
        including dental, vision, mental health care, substance 
        use disorder treatment, prescription drug coverage, and 
        hospice and long-term care. \40\ For additional 
        guidance, see NCLC's ``Don't Add Insult to Injury: 
        Medical Debt and Credit Reports'', \41\ which provides 
        an overview of the crisis of medical debt and potential 
        reforms to protect consumer credit reports. NCLC's 
        ``Model Medical Protection Act'' \42\ also offers 
        language policymakers can use to build on existing 
        State policies and guide the development of new 
        policies to protect consumers from medical debt.
---------------------------------------------------------------------------
     \40\ For an overview of single-payer systems and why this type of 
public system can address racial disparities in medical debt, see Andre 
M. Perry, Joia Crear-Perry, Carl Romer, and Nana Adjeiwaa-Manu, ``The 
Racial Implications of Medical Debt: How Moving Toward Universal Health 
Care and Other Reforms Can Address Them'', Brookings Institution (Oct. 
2021), available at https://www.brookings.edu/research/the-racial-
implications-of-medical-debt-how-moving-toward-universal-health-care-
and-other-reforms-can-address-them/.
     \41\ Available at https://www.nclc.org/images/pdf/medical-debt/
Rpt_Ounce_of_Prevention
.pdf.
     \42\ Available at https://www.nclc.org/images/pdf/medical-debt/
model-medical-debt-protection-act-082017.pdf.
              Additional Material Supplied for the Record
                  STATEMENT SUBMITTED BY MINDY HEDGES
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                STATEMENT SUBMITTED BY PENELOPE WINGARD
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                  STATEMENT SUBMITTED BY SLOANE WESLOH
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                           [all]