Lawyers Push Indiana Legislature to Address Rising Medical Debt – Inside INdiana Business

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About one in six Hoosiers has medical debt in collections — higher than the national average — and that jumps to one in four residents for Hoosiers of color.

In total, the Consumer Financial Protection Bureau estimates the Hoosiers have $2.2 billion in unpaid debt. This means that Indiana has the eleventh highest share of its population with medical debt in collections across the United States, the highest among its neighbours.

The median amount due? Just $748.

For many community organizations, these figures are worrying.

Hoosiers for Responsible Lending, a coalition of the Indiana Community Action Poverty Institute, Grassroots Maternal and Child Health Initiative and Prosperity Indiana, released the numbers in a report analyzing the state’s medical debt and its overall impact on Hoosiers.

“After seven miscarriages, I was finally able to have a child of my own, but it was very expensive due to the time she was in the NICU. The medical bills created so much stress and anxiety. They bankrupted me and I ultimately lost my home,” Deborah Fisher of Grassroots Maternal and Child Health Initiative said in a statement. “I believe we can all find solutions so that my daughter, my little ones -children and other families do not have to face the same challenges.”

Stakeholders compiled the report with the help of Americans for Financial Reforma non-profit group formed in the aftermath of the 2008 financial crisis.

The consequences of debt

Having debts in collection creates barriers and families with children under 18 are more likely have medical debt as well as black and Hispanic households who may already face credit or housing barriers.

The report notes that people with medical debt to be poorer mental and physical health issues, such as depression, anxiety, and high blood pressure. Many could delay or skip medical care because of their debt, which worsens their condition.

“Medical debt that is subject to collection can exacerbate financial hardship and stress; overdue medical debt that is reported to the credit bureaus damages credit ratings and makes it harder to get loans, insurance, rentals and jobs,” the report said.

Due to the country’s decision not to provide universal health insurance coverage, the United States stands out from its peers in the amount of accumulated medical debt and the negative social impact.

States that expanded Medicaid fared better than their peers, with states without expansion having the highest concentration medical debt. But the underinsured, about one in five adults, had inadequate coverage with high deductibles and copayments, still risk high medical bills.

“The burden of medical debt is a pervasive challenge for too many Hoosiers,” said Andy Nielsen of the Indiana Community Action Poverty Institute. “This is unacceptable…Health care is a right, and individuals, families and children should not have to choose between seeking medical care or facing crippling debt.”

Analyzing the Debt Burden in Hoosier Communities

The Indiana Community Action Association released a survey between 2020 and 2021 of 5,822 Hoosiers who shared information about their debts. Their clients, generally speaking, are at or below 125% of the federal poverty level (although the CARES Act raised that threshold to 200% temporarily).

Almost half of these respondents, 47.6%, said they had unpaid medical debt. Most, 40%, said their medical debt balance was between $1,000 and $10,000, but 17.4% said they had more than that.

The Indiana Community Action Poverty Institute noted that Indiana’s Medicaid eligibility threshold is 133% of the federal poverty level ($2,313 per month for a family of four in 2022), which means that almost everyone surveyed should have been eligible for coverage.

“Clearly there is work to be done to ensure that everyone who is eligible for Medicaid is enrolled and covered,” the report said.

Nearly a third of Hoosiers surveyed, 30.6%, said they had medical debt in collection. According to Urban Institute with the U.S. Census Bureau, about 16% of all Hoosiers have medical debt in collections, or 25.3% for Hoosiers of color. In Allen County, the disparity was even greater, with 29.7% of colored Hoosiers reporting medical debt in collections, compared to just 11.9% of white Hoosiers. On average, each person with medical debt in collection in Allen County owed $872.

State-level action

In December 2021, Speaker of the House Todd Huston and Senator Pro Tem Rodric Bray sent letters to health insurance companies and health systems urging them to reduce Indiana’s disproportionately high healthcare costs.

Several responded, including the Indiana Hospital Associationpromising measures to reduce the overall cost of care, but resisting “brutal government intervention”.

In an April response to those letters, Huston and Bray said they wanted to continue the conversation.

“Our overarching goal is to lower the cost of health care and deliver real savings for Hoosiers and everyday business owners,” Huston said. “The Hoosiers are rightly frustrated with rising costs and simply cannot afford to do nothing to reduce healthcare spending.”

The Hoosiers for Responsible Lending report made several recommendations to reduce the debt burden, including stronger consumer protections, expanding Medicaid enrollment and requiring Indiana hospitals to adopt financial aid policies.

The report urges lawmakers to draft financial aid eligibility standards requiring all hospitals to provide financial aid. According to National Consumer Law CenterIndiana is one of the few states that does not require these provisions.

“The findings of this report indicate that, of all Midwestern states, Indiana has the highest share of its population with medical debt in collection,” said Jessica Love, executive director of Prosperity Indiana. “This should give pause to any policy maker concerned with long-term economic stability. Indiana policymakers should act quickly to use these findings and implement recommendations to increase consumer protection for all Hoosiers.

The report acknowledges that the $2.2 billion in delinquent medical debt already held by Hoosiers poses an additional challenge, since private collection companies own that debt. Research on burden reduction is limited but offers potential avenues for further research.

The Indiana Capital Chronicle is an independent, nonprofit news organization that covers state government, politics and elections.

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John A. Bogar