State ready to slash $30 million in medical debt

Republican-American – Monday, December 16, 2024
By Paul Hughes

HARTFORD – Approximately $30 million in medical debt for nearly 23,000 Connecticut patients is being wiped out at a cost of roughly $100,000, Gov. Ned Lamont announced Monday.

The Lamont administration is expecting to leverage $6.5 million from the state’s allocation of American Rescue Plan Act funding to eliminate at least $650 million in medical debt through a partnership with the national nonprofit organization Undue Medical Debt.

There is no application process for this medical debt relief and it cannot be requested under the initiative that Lamont and the General Assembly authorized and funded last year. Instead, residents whose debt has been identified for relief will receive a branded letter from Undue Medical Debt indicating which debt or debts have been eliminated.

The $30 million announced Monday represents the first round of debt forgiveness. Letters notifying the 23,000 state residents receiving relief under this initial tranche will be delivered through the U.S. mail beginning Dec. 23.

The debt relief is available to patients whose income is within 400% of the federal poverty level, or who have medical debt that is 5% or more of their income. The current federal poverty level for a family of four is $31,200.

Undue Medical Debt contracts with state and local governments and leverages public investments to negotiate with hospitals, other health care providers and sometimes debt buyers on the elimination of large, bundled portfolios of qualifying medical debt owed by eligible patients.

Allison Sasso, president and CEO of Undue Medical Debt, reported the nonprofit organization has eliminated $15 billion in medical debt for almost 10 million people across the country since 2014.

Because these medical debts are acquired in bulk and belong to debtors who are least able to pay, they cost a fraction of their face value, she said. As a rule of thumb, Undue Medical Debt calculates the ratio is 1-to-100, meaning every $1 spent generally buys $100 in medical debt.

“Usually it is cheaper,” Sasso said. “What we have experienced here is it is usually cheaper. It is usually because of the age of the debt.”

Sasso joined Lamont, Lt. Gov. Susan Bysiewicz, and representatives of several hospitals and the Connecticut Hospital Association to announce the first round of cancellations at the state Capitol.

“Medical debt is something you don’t generally have control over,” Lamont said. “Medical debt is when you get hit and hit hard by sudden medical emergency, and, all of a sudden, you find out that the anesthesiologist is out of network, or a high deductible, and we’re doing everything we can to make sure this is an emergency you can live through, and make sure you’re taken care of, and making sure when you come out of the hospital you don’t have another burden on your shoulders.”

Sasso said the root of the problem is not uninsured people being unable to pay medical debts, but rather the problem is people with insurance being unable to afford high deductibles, or higher premiums for plans with better coverage.

“I want to be clear about that. People have insurance,” she said.

Hospitals in the state do not sell medical debt to debt buyers, said Jennifer Jackson, president of the Connecticut Hospital Association.

She said hospitals here make efforts that insurance companies and the federal government require to collect medical debts, but hospitals do not sell debts that they are unable to collect after exhausting the available options, such as trying to connect patients to insurers or a hospital’s financial assistance programs.

“We are very opposed to aggressive collection efforts,” Jackson said.

Lamont signed a state law earlier this year prohibits that health care providers and hospitals in Connecticut from reporting a person’s medical debt to credit rating agencies for use in credit reports. It also voids any medical debt that is reported to credit rating agencies. It took effect July 1. Jackson said Connecticut hospitals did not report medical debt to credit rating agencies before the law was enacted.

Lamont said his administration intends on continuing to partner with Undue Medical Debt to provide further rounds of medical debt elimination.

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