by Theresa Opeka - The Carolina Journal

More than $6.5 billion in medical debt has been eliminated for over 2.5 million North Carolinians in the past year, according to Gov. Josh Stein, who made the announcement Monday, along with North Carolina Department of Health and Human Services (NCDHHS) Secretary Dev Sangvai.

The state’s Medical Debt Relief Program, which is being facilitated by Undue Medical Debt, was started in July 2024 by former Gov. Roy Cooper and former NCDHHS Secretary Kody Kinsley.

Medical debt remains a big issue for many Americans.

A West Health-Gallup Healthcare Survey revealed that 12%, or approximately 31 million Americans, reported borrowing an estimated total of $74 billion in the past 12 months to cover health care costs for themselves or a household member. A majority of Americans (58%) shared concerns that they would experience medical debt if faced with a major health event.

But Joseph Harris, fiscal policy analyst for the John Locke Foundation, says the issue is not quite as simple as debt forgiveness.

“The medical debt forgiveness may appear compassionate, but it’s built on the same unstable provider-tax shell game that the federal government is now trying to fix in the OBBB,” Harris said. “Under the debt forgiveness plan, hospitals erase patient debt in exchange for higher Medicaid payments from the state. Those higher payments trigger greater federal matching funds, which the state then uses to cover the extra reimbursements. The state also collects a provider tax from the hospitals to offset its share of those payments.”

Harris concluded, “In effect, unpaid medical bills are being shifted from patients to federal taxpayers through a circular funding scheme.”

NCDHHS asked the US Centers for Medicare and Medicaid Services (CMS) to approve a set of conditions hospitals must meet in order to be eligible to receive an enhanced amount of Medicaid funds.

Under the new agreement, hospitals are required to implement the following policies:

Relieving all medical debt deemed uncollectible dating back to Jan 1, 2014, for any individuals not enrolled in Medicaid with incomes at least at or below 350% of the federal poverty level (FPL) or for whom total debt exceeds 5% of annual income
Relieving all unpaid medical debt dating back to Jan. 1, 2014, for individuals who are enrolled in Medicaid
Providing discounts on medical bills of between 50-100% for patients with incomes at or below 300% FPL, with the amount of the discount varying based on the patient’s income
Automatically enrolling people into financial assistance, known as charity care, by implementing a policy for presumptively determining individuals eligible for financial assistance through a streamlined screening approach
Not selling any medical debt for consumers with incomes at or below 300% FPL to debt collectors
Not reporting a patient’s debt covered by these policies to a credit reporting agency

Hospitals that agreed to the requirements would be eligible for enhanced payments under the Healthcare Access and Stabilization Program (HASP).

The conditions included relieving $4 billion (which was exceeded by $2.5 billion) in existing medical debt for two million low and middle-income North Carolinians and establishing policies to prevent the future accumulation of medical debt.

In August 2024, every eligible hospital in the state signed on to participate in the first-of-its-kind Medical Debt Relief Program.

“Medical debt is a tremendous weight keeping so many families from financial security, and, unlike most other forms of debt, it’s not a choice,” said Stein, a Democrat. “Today’s announcement will free people from financial stress so they can focus on getting healthy. I thank Governor Roy Cooper, DHHS Secretary Kody Kinsley, and the hospitals that partnered with the State of North Carolina to make this life-changing news possible. I urge the General Assembly to keep this momentum going by coming back to the table and fully funding Medicaid.”

The program does not utilize state funds, and eligible individuals do not need to take any action.

People across the state have begun receiving letters from hospitals letting them know that their medical debt has been forgiven. Additionally, Undue Medical Debt is sending letters to thousands of North Carolinians letting them know they have had some or all of their debt relieved. At least 255,000 letters are being sent this week, with additional letters to follow in the coming months and years.

Theresa Opeka is the Executive Branch reporter for the Carolina Journal.

NC program wipes out $6.5B in medical debt for 2.5M residents

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