Millions burdened with US medical debt

DENVER — After 19 lifesaving abdominal operations, Cindy Powers was driven into bankruptcy. As for Lindsey Vance, medical debt started stacking up after she crashed her skateboard and had to get nine stitches on her chin. And for Misty Castaneda, open heart surgery for a disease she had since birth saddled her with $200,000 in bills.

These are just three of an estimated 100 million people in the United States who have amassed nearly $200 billion in collective medical debt — almost the size of Greece's economy, the Kaiser Family Foundation said.

Now, lawmakers in at least a dozen states and Congress have pushed legislation to curtail the financial burden that has pushed many into untenable situations: forgoing needed care for fear of added debt, taking a second mortgage to pay for cancer treatment, or slashing grocery budgets to keep up with payments.

Some of the bills would create medical debt relief programs or protect personal property from collections, while others would lower interest rates, keep medical debt from tanking credit scores or require greater transparency in the costs of care.

In Colorado, House lawmakers approved a measure on Wednesday that would lower the maximum interest rate for medical debt to 3 percent, require greater transparency in treatment costs, and prohibit debt collection during an appeals process.

But there are opponents. Colorado Republican Senator Janice Rich said she is worried that the proposal could "constrain hospitals' debt collecting ability and hurt their cash flow".

For patients, medical debt has become a leading cause of personal bankruptcy, with an estimated $88 billion of that debt in collections nationwide, according to the Consumer Financial Protection Bureau. Roughly 530,000 people reported falling into bankruptcy annually partly due to medical bills and time away from work, according to a 2019 study from the American Journal of Public Health.

Powers' family ended up owing $250,000 for the 19 lifesaving abdominal surgeries. They declared bankruptcy in 2009, and then the bank foreclosed on their home.

"Only recently have we begun to pick up the pieces," said James Powers, Cindy's husband, during his February testimony in favor of Colorado's bill.

Castaneda, who was born with a congenital heart defect, found herself $200,000 in debt when she was 23 and had to have surgery. The debt tanked her credit score and forced her to rely on her emotionally abusive husband's credit.

For over a decade, Castaneda wanted out of the relationship, but everything they owned was in her husband's name, making it nearly impossible to break away. She finally divorced her husband in 2017.

"I'm trying to play catch-up for the last 20 years," said Castaneda, a 45-year-old hairstylist from Grand Junction on Colorado's Western Slope. Medical debt is not a strong indicator of people's creditworthiness, said Isabel Cruz, policy director at the Colorado Consumer Health Initiative.

While buying a car beyond your means or overspending on vacation can partly be chalked up to poor decision-making, medical debt often comes from short, acute care treatments that are unexpected, leaving patients with hefty bills that exceed their budgets.

For Vance, protecting her credit score early could have had a major impact. Vance's medical debt began at age 19 from the skateboard crash, and then was compounded when she broke her arm soon after. Now at 39, she has never been able to qualify for a credit card or car loan. Her in-laws co-signed for her Colorado apartment.

"My credit identity was medical debt, and that set the tone for my life," she said.

Agencies Via Xinhua