The Attorney General of Massachusetts is recommending a prohibition on the credit reporting of medical debt while also making other suggestions about how medical debts are collected as part of a report that her office released this week on healthcare cost trends in The Bay State. The report includes specific recommendations to address these issues, such as prohibiting medical debt from being reported to credit bureaus and improving medical debt collection practices to protect vulnerable consumers.
Driving the news: The report released by Attorney General Andrea Joy Campbell explores the challenges Massachusetts households with commercial health insurance face in affording health care, and the accumulation of medical debt when they cannot pay. The report offers insights into ongoing affordability gaps in health care access across the state and provides policy recommendations aimed at reducing medical debt and protecting vulnerable communities.
By the numbers:
- Households in the lowest-income zip codes with employer-sponsored insurance spent, on average, nearly $550 more on cost-sharing expenditures in 2022 compared to those in the same zip codes enrolled through the individual market.
- Lower-income households in fully-insured plans spent 13% of their income on premiums and cost-sharing, compared to only 2.7% for households in the highest-income zip codes.
- Massachusetts residents in lower-income zip codes, female patients, and Black patients are disproportionately burdened by hospital medical debt.
State of play: The report highlights how high cost-sharing and premiums disproportionately impact lower-income households. Despite having insurance, many residents find themselves incurring debt, skipping necessary care, or sacrificing other essentials like food and housing to afford health care expenses. Hospitals serving these lower-income communities are also feeling the strain, with a higher share of revenue lost to unpaid bills.
The recommendations: To tackle these affordability challenges, the Attorney General’s Office recommends:
- Establishing community-level benchmarks to better assess household spending on health care versus income capacity.
- Implementing stricter requirements for providers’ financial assistance policies, ensuring discounts apply to all patients’ cost-sharing, such as deductibles.
- Prohibiting medical debt from being reported to credit bureaus and urging providers to adopt the recommended medical debt collection practices.
- Introducing greater protections around collection practices for medical debt, including proactively offering affordable payment plans and restricting debt collection actions during disputes.
- Providing more support for hospitals that serve lower-income communities to address rising levels of bad debt.
Key recommendations related to medical debt collection and credit reporting:
- Prohibit medical debt from being reported to credit bureaus.
- Adopt recommended practices for medical debt collection, including offering affordable payment plans and restricting collection actions during good faith disputes.
What they said: “The vast majority of Massachusetts residents have some form of health care coverage, but regardless of coverage status, out-of-pocket costs remain unaffordable,” Campbell said in a statement.
