The COVID-19 pandemic underscored the profound inequities in New York’s health care system and exposed the deadly consequences when a million New Yorkers are uninsured, and millions more have inadequate insurance. As a result, the economic security of most working New Yorkers – especially the communities of color whom we represent – is at risk.
All 200 hospitals in New York are nonprofit organizations and designated as charities under the tax code. And unlike their patients, they pay no income or property taxes. These same hospitals also receive billions of dollars in financial support through the state’s Indigent Care Pool (ICP) and Medicaid program. The ICP fund is specifically designed to support them in providing financial assistance to patients and to offset the costs associated with uncompensated care.
Even so, some of these charities hound their patients into debt through aggressive collection actions, such as filing lawsuits, placing liens on their homes, and garnishing up to ten percent of their gross wages. Patients face hidden charges, such as bogus facility fees that merely pay for hospital overhead charges, not legitimate medical care. And even though all patients with incomes below 300 percent of poverty (around $70,000 a year for a family of three) are eligible for financial assistance, few patients are told about how to apply for it and the applications are difficult to find and fill out. The end result: medical debt is strangling the economic security of millions of New Yorkers.
Take, for example, the case of Milagros E., a Long Island home health worker. North Shore University hospital secured a judgment for $4,000 against her after she did not come to court. The collection agents then garnished her limited wages despite her best efforts to arrange an affordable payment plan.
These situations happen frequently, and they are not only hurtful financially, but also to the relationships New Yorkers have with their healthcare providers. Extreme medical debt collection practices also contribute to housing insecurity and jeopardize the physical and fiscal health of our citizens. As a state, we can do better. As a community striving for equity, we must do better.
In the wake of a two-year #EndMedicalDebt campaign to raise public awareness about aggressive practices like these, state lawmakers enacted two pieces of legislation protecting New Yorkers from these practices. One piece of legislation (S. 6522A/A.7363A) will protect patients from having liens taken against their primary residences or their wages garnished due to money judgments arising from debt collection lawsuits. The second (S.2521C/A.3470C) will ban facility fees for all preventative care and require hospital-affiliated providers to inform patients in advance if they will be charged one.
Milagros’story is no one-off anecdote. A recent Consumer Financial Protection Bureau (CFPB) report underscored how widespread medical debt is, finding that 20 percent of Americans have medical debt, and that current practices in medical debt collections and credit reporting can cause significant harm to people with medical debt, especially for Blacks and Latinos, low-income families, younger adults of all races and ethnicities, veterans and older adults.
The CFPB report further stated that many families are “coerced into paying invalid, unsubstantiated and inaccurate medical bills” by threat of reporting those medical accounts to the credit reporting bureaus. A New York poll issued in March validated this point, with 41 percent of respondents saying they paid or appealed a bill they did not think they owed for fear of being placed in collections or being sued. Furthermore, an analysis by the Community Service Society of the employers of patients who were the subject of wage garnishments in medical debt lawsuits were typically paid wages at, or just above, the poverty level. In other words, most of the patients whose wages were garnished were likely eligible for hospital financial assistance and should not have been sued in the first place.
After the State Legislature passed S.6522A and A.7363A earlier this year with bi-partisan support in both chambers, the bill’s Senate sponsor and Chair of the Senate Health Committee, Senator Gustavo Rivera said: “No one should be at risk of losing their hard-earned wages or their home because they needed medical care.”
We applaud the Senator, retiring Assembly Health Chair Richard Gottfried, and their colleagues in the Legislature for passing legislation that puts an end to harmful liens and wage garnishments by hospitals in medical debt collection actions, and protects patients from unnecessary facility fees. Now we need Governor Hochul to sign them into law. In doing so, she can demonstrate New York State’s commitment to its residents, by helping them avoid paying unnecessary fees at the doctor’s office and protecting their homes and their income from extreme medical debt collection practices.
David R. Jones, Esq., is President and CEO of the Community Service Society of New York (CSS), the leading voice on behalf of low-income New Yorkers for more than 175 years. The views expressed in this column are solely those of the writer. The Urban Agenda is available on CSS’s website: www.cssny.org.