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Approximately 19% of U.S. households carry medical debt – that number jumps to 25% for households with children under the age of 18. The prevalence of medical debt puts pressure on families to afford basic needs and can lead to bankruptcy. Patients with medical debt may opt to forgo future necessary medical treatment to ensure they don’t worsen their financial situation. Due to the gravity of the situation, there has been increasing pressure for policymakers to understand and address our nation’s growing medical debt situation. The Senate Health, Education, Labor and Pensions (HELP) Committee recently held a hearing to discuss potential policy solutions, ranging from increased price transparency requirements to strengthening consumer protections against aggressive debt collection practices. In the hearing, non-profit providers faced scrutiny for their perceived role in increasing medical debt and not doing enough with their tax savings to alleviate the debt burden. The Talking Point: A Uniquely U.S. Problem The prevalence of medical debt in the U.S. is a uniquely American problem, one that is not as prevalent in other industrialized nations. Over 100 million individuals in the US have health care debt, making it the leading cause of bankruptcy in the U.S, according to a poll by KFF. It disproportionately affects historically and currently marginalized groups and can infiltrate all aspects of an individual’s life. Health care costs are only getting higher; federal projections show Americans are expected to spend more than $5 trillion on health care in 2024 and those costs are projected to increase to nearly $8 trillion by 2032. Increasingly Under the Microscope The Senate HELP committee’s medical debt hearing took aim at insurers and providers – with a keen focus on non-profits – and their role in medical debt. Senator Bill Cassidy (R-LA) stated that hospitals “are not doing enough” to address the problem. The committee also took aim at how non-profits are utilizing their 340B savings and why the savings are not going to debt relief. This argument was raised by Dr. Ge Bai, PhD, CPA, professor of accounting and health policy at Johns Hopkins University, which has provided testimony in other congressional hearings about tax-exempt status and receives research funding from Arnold Ventures, a hedge fund that has taken aim at hospitals in general and NFP hospitals in particular, blaming providers for the high cost of health care. While there was bipartisan support for addressing the issue, Republican leaders did push back on a medical debt forgiveness plan, referring to it as a band-aid. The Biden Administration also recently proposed a rule that would remove medical debt from credit reports. Legislation Under Consideration States and local governments are also trying to pass their own medical debt policies. In 2024, nearly 17 state legislatures considered medical debt measures. In Florida, HB 1549 established a three-year statute of limitations for collecting medical debt. North Carolina recently applied for a CMS waiver to offer Medicaid enhaced payments to providers participating in a medical debt mitgation program. Orange County, FL and Cincinnati, Ohio, are seeking to use American Rescue Plan (ASP) funds to cancel medical debt for their residents. The list goes on and medical debt will continue to be a top issue in the 2025 state legislative sessions.