Arizona Prop. 209 will change the rules on debt collection
Arizonans will decide Tuesday on Proposition 209, a statewide ballot measure that would lower maximum interest rates on medical debt and change several rules on general consumer debt collection.
Proposition 209 — the Predatory Debt Collection Act — would not only lower the interest rate cap on medical debt, but also increase the value of protected assets of certain creditors, including state and local government tax liens.
If passed, the medical debt limit in Proposition 209 would only apply to medical debt incurred after the measure takes effect. In other words, old medical debts would not be protected with the maximum limit of 3%.
But Arizonans with old debts would be protected in other ways, including a reduction in wage garnishments and an increase in the value of assets like homes and cars that are protected from creditors.
Opponents include several members of the business community, including financial institutions. They say the way the initiative is written is too broad because some of its components will apply to more than just medical debt. The measure increases the value of assets protected from all creditors, not just health care creditors.
Critics also say the measure will weaken the ability of creditors to collect their debts. As a result, financial institutions will be less willing to lend, hurting the Arizona workers the measure is trying to protect, critics say.
Proponents of the measure point out that the initiative does not forgive anyone’s medical or consumer debt. Rather, it gives people leverage to pay what they owe without losing their homes, cars, and all of their savings.
In a year when inflation and the economy are on the minds of voters across the United States, Proposition 209 is getting some national attention as a test case for other states, according to the Fairness Project, a nationwide organization. nonprofit that funds, organizes and advocates for voting measures and supports Proposition 209.
“If Proposition 209 is successful in Arizona this year, we may see this issue on the ballot in more states,” Fairness Project executive director Kelly Hall told The Arizona Republic last month.
Arizonans Fed Up with Failing Healthcare is the ballot measurement committee behind Proposition 209. Healthcare Rising Arizona is the healthcare advocacy group promoting it, with support from the SEIU United Healthcare Workers West union. based in California.
Other supporters include the Arizona Faith Network, the Arizona Student Association, the Southwest Fair Housing Council, and the Arizona Education Association.
Among those who have registered as opponents of Proposition 209 are Victor Riches, president and CEO of the Goldwater Institute; chambers of commerce in both metro Tucson and greater Phoenix; and Paul Hickman, president and CEO of the Arizona Bankers Association.
The most recent data from the Urban Institute, a Washington, D.C. think tank, indicates that just over a quarter of state residents – 27% – had some type of debt in collection, and the median level of overall debt in collection is $1,903. . The number is based on February 2022 credit data.
Proponents of Proposition 209 say medical debt sometimes shows up in general debt categories because people use credit cards to pay their health care bills.
People of color, who are also more likely to lack health insurance, are disproportionately affected by debt, according to the Urban Institute study.
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