September 23, 2019

Sanders unveils plan to eliminate $81B in US medical debt

Daily Briefing

    Sen. Bernie Sanders (I-Vt.), who is seeking the 2020 Democratic nomination for president, on Saturday announced a plan to eliminate billions of dollars in medical debt accumulated by patients under the current U.S. health care system.

    Where the 2020 Democratic candidates stand on health care

    Medical debt affects uninsured Americans and a growing number of insured Americans who have high deductibles or limited health insurance networks. A 2018 study published in Health Affairs found 16% of adults with credit reports have at least one instance of medical debt.

    Plan details

    Sanders' plan is designed to eliminate an estimated $81 billion in existing medical debt. The plan calls for the federal government to negotiate and cancel the existing medical debt, but provides few details on how the negotiations and debt cancelation would be accomplished.

    His plan also calls for changing the rules on collection of medical debt. For example, his plan would establish a new legal process, which would be managed by the bankruptcy court system, to adjudicate medical debts not in collections. According to Vox, the proposal would place new restrictions on how health care providers and collections agencies go about collecting unpaid bills from patients.

    It would also eliminate the means-testing requirement for individuals to file for protection from creditors, and it would replace the roughly $10 billion for-profit credit reporting industry with a "public credit registry." The new credit registry, under Sanders' plan, would provide free credit scores and exclude medical debt from credit ratings. As Vox notes, Sanders' plan would be a major shift in the way Americans' credit scores are determined and how those scores could be used.

    Under his plan, the IRS also would review the billing and collection practices of nonprofit hospitals, and Americans would no longer have to disclose medical debt discharges on housing and loan applications.

    Sanders said he is seeking to address medical debt "on both ends." He said, "We're addressing it now by trying to help the people who have past due medical bills. And we're addressing it by" seeking to create "a health care system that guarantees coverage to people without any premiums, without any deductibles, without any out-of-pocket expenses."

    Sanders' plan would be costly, but its price tag would be less than the face value of debt Sanders is proposing to cancel, according to the New York Times. Craig Antico, a founder of the charity RIP Medical Debt, which purchases and forgives medical debt, estimated the market value of $81 billion in debt could be as low as $500 million.

    Neale Mahoney, a professor of economics at the University of Chicago, who researches medical debt, said, Sanders' plan "is well targeted," but "[i]t just may not be that much relief" (Rummler, Axios, 9/21; Sanger-Katz/Ember, New York Times, 9/21; Whitesides, Reuters, 9/21; Scott, Vox, 9/21; Golshan, Vox, 9/21; Bloomberg/Los Angeles Times, 9/21).

    X
    Cookies help us improve your website experience. By using our website, you agree to our use of cookies.