RALEIGH, N.C. (WGHP) – Two bills to provide protections for consumers against high medical debt – including mandating free health care for some – are in the North Carolina General Assembly less than a year after that idea didn’t make it out of a House committee.

Senate Bill 321 and House Bill 367 – both called “the Medical Debt De-Weaponization Act” – seek to limit mounting medical debt and help families avoid bankruptcy and significant damage to their credit ratings, and in their identical 11 pages these bills would specify financial assistance levels for low-income families, limit medical debt interest rates to 5% annually, require medical facilities to post price information online and to limit their options for collecting debt.

They also would mandate that hospitals – particularly nonprofit hospitals – provide free coverage for low-income families and discounted costs for many families that have a high level of debt.

These bills have strong bipartisan backing in both chambers as well as the endorsement of at least one of the candidates for governor in 2024.

State Sen. Joyce Krawiec (R-Kernersville)

Sen. Joyce Krawiec (R-Kernersville), chair of the Senate Health committee, is one of the primary sponsors of SB 321, along with Carl Ford (R-Rowan) and Jim Burgin (R-Harnett). Cosponsors in the Senate include Piedmont Triad Sens. Gladys Robinson (D-Greensboro), Amy Galey (R-Alamance) and Ralph Hise (R-Spruce Pine).

In the House, primary sponsors are Rep. Edward Goodwin (R-Chowan), Rep.  Garland Hoke (D-Hoke), Rep. Charles Miller (R-Brunswick) and Mecklenburg County Rep. Tricia Cotham, who recently switched from Democrat to Republican.

State Rep. Pricey Harrison (D-Greensboro)

Triad Democratic Reps. Pricey Harrison (D-Greensboro), Amber Baker (D-Winston-Salem) and Renee Price (D-Hillsborough) along with Republicans Brian Biggs (R-Trinity), Neal Jackson (R-Robbins) and Larry Potts (R-Lexington) are among some 26 cosponsors.

The bill passed quickly through the Senate Health Committee on a voice vote on Thursday morning. Its next stops are the Judiciary, Finance and Rules committees – Rules being the final hearing for all bills – and then perhaps to the Senate floor.

Kraweic introduced an amendment to clarify the title of the bill before presenting the concept to the committee. She called it  “pro-family, anti-poverty, pro-consumer.”

The bill “provides patients access to charity care,” she said, “and prohibits large medical facilities from using medical debt as a weapon.”

She said the bill lays out guidelines to protect consumers’ credit reports – she outlined how this can happen – and “sets up process where it would be fair to consumer.”

HB 367 was read into the Rules Committee (the starting point for all bills) on March 15, but it has not progressed. There is a possibility that it could wait there to be merged with a bill passed by the Senate before House members would review, discuss and possibly amend.

One big supporter

NC Treasurer Dale Folwell (WGHP)

But one person whose name doesn’t appear on the bill has been campaigning for its passage for two years now: NC Treasurer Dale Folwell, a Republican candidate for governor next year, said he thinks the idea is grand.

Folwell issued a press release Tuesday that cited a familiar lament by him that “families can’t see themselves past their poverty because of medical debt,” which he called a “moral issue.”

“Lawmakers have the chance to change the lives of thousands of North Carolinians,” he said. “With inflation at 40-year highs and rising health care costs, we can’t afford to wait for reform.”

Folwell’s championing of these ideas dates to 2022, and he has conducted several public forums across the state to spread the message and consider comment.

Folwell, who is a CPA, assails hospital companies for their failure to provide charity care while claiming nonprofit status – an issue the bill specifically addresses – and he questioned the compensation model for hospital executives, to which the North Carolina Healthcare Association pushed back.

“We are talking about multibillion-dollar corporations that are disguising themselves as nonprofits,” Folwell said during a community forum last month in Greenville. “They don’t pay sales tax, don’t pay income tax, don’t pay property tax.”

Folwell spent eight years (2005-2013) in the House, and he has said he feels optimistic about the passage of these bills.

“This bill is a consumer protection bill,” Krawiec told the Winston-Salem Journal when she filed her bill. “Medical debt is the number one reason for debt collections and is a leading cause of bankruptcy. The bill provides a process for billing and for filing for medical collections. It also forbids unfair collection processes and enhances legal remedies.”

Why this bill?

Harrison was a primary sponsor last session of House Bill 1039, which never made it out of the House Banking Committee in May, and she is motivated to address this issue, saying she had a large number of constituents who are facing bankruptcy because of medical debt.

She shared data that had been circulated in the General Assembly showing why the act is needed.

Research shows that among consumers who received letters or phone calls from debt collectors, 59% were because of medical bills, the most common reason, more than twice as often as tax collection and nearly six times collections for rent.

Medical debt is also the leading cause of bankruptcy (59% as of 2016) and negatively affects the credit rating – and this big-ticket buying power – of about 1 in 5 consumers.

Data also show that many families skip health care because of cost and likely debt, and this debt is incurred even though two-thirds of those in medical debt had health insurance.

“I found this to be compelling,” Harrison said.

The bills’ most significant protection might be its requirement of financial aid to be made available for families, including free care to any household that falls within 200% of the federal poverty level. For a single person, that’s $29,160, and for a family of four, that could be as much as $60,000.

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But there is a scale to provide discounts of varying percentages for households with higher income, especially if they have significant medical bills, such as free care for expenses of more than $10,000 in some cases.  

Specifics in the bill

The bill focuses significantly on “large medical facilities,” which might be described as hospitals, surgical centers and outpatient clinics, among other definitions, and sets broad requirements for how those large healthcare facilities handle billing and debts:

  • Requires facilities to develop a financial assistance policy that specifies how charges are calculated and how patients may apply for assistance.
  • Specifies the procedures that a facility must take in seeking payment for any “emergency or medically necessary care,” including options for financial assistance, which could range from no cost to discounted based on income and cover expenses that insurance doesn’t underwrite.
  • Requires facilities to publicize those policies and provide them to patients before going through collections.
  • Specifies 30-day and 1-year deadlines for responding to an application for aid and to hold off debt collectors until this process is complete.
  • Bars late fees or interest charges for patients eligible for aid and requires collectors to reverse any action taken if aid later is approved, including effects on credit reports and legal steps.
  • Limits debt collectors’ actions, such as arrest, garnishing wages or tax refunds and foreclosing on real estate.
  • Sets at 180 days after the first billing before a collector can take steps such as affecting credit.
  • Prohibits collectors from reporting on credit of unpaid bills within 1 year after a patient is billed.
  • Designates that parents and guardians are jointly liable for any medical debts incurred by minors and shields family members from medical and nursing home debts incurred by a spouse or parent.
  • Establishes the state attorney general as the enforcement official for these steps.