Ending the Medical Debt Crisis in America

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SUBJECT: What Can Congress Do to End the Medical Debt Crisis in America?

DATE: July 11th, 2024

OVERVIEW: The United States Senate Committee on Health, Education, Labor, and Pensions held a hearing to discuss potential solutions to the medical debt crisis in America, focusing on both immediate relief measures and long-term systemic reforms.

HEARING RECORDING LINK: https://www.help.senate.gov/hearings/what-can-congress-do-to-end-the-medical-debt-crisis-in-america

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Witnesses

• Dr. Abdul El-Sayed, Director of Public Health, Wayne County, Michigan 
• Dr. Bernardine Messac, Emergency Physician at Harvard Medical School
• Ms. Allison Boyd, Neonatal Nurse Practitioner with personal medical debt experience 
• Dr. Fumiko Chino, Oncologist and cancer researcher with personal medical debt experience
• Dr. Ge Bai, Professor at Johns Hopkins University, focused on medical pricing in the U.S.
• Dr. Benedic Ippolito, Senior Fellow Researcher at the American Enterprise Institute

Key Themes & Highlights

• Republican Concerns:
  • Policy Enforcement and Accountability: Republicans, led by Senator Cassidy, emphasized misconceptions concerning implementing existing healthcare policies like the 340B Drug Pricing Program. Specifically, it raises the concern that medical institutions receiving clinical drug concessions intended for patients often conserve such benefits in favor of prioritizing the compensation of healthcare corporations over the needs of the individual. Stronger federal enforcement is needed to ensure government benefits reach the patients they are meant to help.
  • Skepticism About Debt Cancellation: Certain Republicans expressed concerns that immediate medical debt cancellation for certain clinical services would be a temporary fix without addressing the underlying issue of high healthcare costs. They argued that widespread debt forgiveness could incentivize bad practices from providers and potentially increase the national deficit, impacting taxpayers.
  • Focus on Reducing Healthcare Costs: Republicans highlighted that medical debt is a symptom of exorbitant healthcare costs. They advocated for measures to reduce these costs through increased competition, transparency, and market-driven solutions rather than immediate debt forgiveness.
• Democratic Concerns:
  • Immediate Relief for Patients: Democrats, represented by Senator Sanders and others, stressed the urgent need to address the medical debt crisis through immediate actions such as debt cancellation. They highlighted the human toll of medical debt, sharing anecdotes of individuals and families burdened by insurmountable bills despite having insurance.
  • Medicare for All: Many Democrats and witnesses endorsed "Medicare for All" as a long-term solution to eliminate medical debt by providing universal healthcare coverage. They argued that a single-payer system would reduce administrative costs and ensure that all Americans have access to necessary medical care without fear of debt.
  • Transparency and Enforcement of Existing Policies: Democrats advocated for increased transparency of healthcare budgeting plans along with stronger accountability among state legislatures to implement existing policies like the 340B program. They emphasized that benefits provided by the government should directly assist patients rather than augment hospital profits.
• Witness Testimonies:
  • Dr. Abdul El-Sayed (Wayne County Public Health): Highlighted the enormity of medical debt in the U.S., totaling $220 billion—more than the GDP of many states. Emphasized that providers are raising costs that burden consumers and advocated for Medicare for All as a long-term solution. Stressed the need for immediate action to alleviate medical debt and enforce existing policies to ensure benefits reach patients.
  • Dr. Bernardine Messac (Harvard Medical School): Shared experiences as an emergency physician witnessing patients avoiding necessary care due to fear of incurring debt. Criticized the "moral hazard" argument against universal coverage, stating that patients' fears are justified given aggressive debt collection practices. Advocated for Medicare for All and suggested that the IRS should allow hospitals to verify patient income before admission to prevent debt accumulation.
  • Ms. Allison Boyd (Neonatal Nurse Practitioner): Shared her struggle with $80,000 in medical debt following the premature birth of her twins, despite having insurance. Described working multiple jobs to manage the debt and the ongoing financial strain on her family. Endorsed medical debt cancellation to relieve families facing similar hardships and improve their ability to follow medical recommendations for their children's health.
  • Dr. Fumiko Chino (Oncologist and Cancer Researcher): Recounted her experience with medical debt after her husband's cancer diagnosis and death. Faced significant out-of-pocket expenses and aggressive, misleading debt collection practices, including being contacted during her husband's funeral. Supported immediate debt relief and Medicare for All, emphasizing that medical debt worsens health outcomes and that patients should not have to choose between "life over life savings."
  • Dr. Ge Bai (Johns Hopkins University): Emphasized that high healthcare prices are the root cause of medical debt and must be addressed to prevent recurrence. Criticized the 340B Drug Pricing Program for not functioning as intended, as hospitals receive discounts but still mark up prices for patients. Opposed debt cancellation as a standalone solution and advocated for policy corrections, increased transparency, and competition to lower healthcare costs.
  • Dr. Benedic Ippolito (American Enterprise Institute): Urged policymakers to be realistic about the benefits of debt relief, cautioning against overly optimistic projections. Warned that medical debt forgiveness could create upfront costs, reduce incentives for repayment, and might not significantly impact the economy due to the relatively small size of medical debts. Emphasized the need to address the underlying issues driving high healthcare costs.
• Contentious Points:
  • Republicans: Focused on the potential overreach of debt cancellation initiatives, economic drawbacks, and perceived regulatory burdens. They expressed concern that immediate debt forgiveness could incentivize irresponsible financial practices by providers and patients, leading to increased healthcare costs and impacting taxpayers.
  • Democrats: Emphasized the importance of providing immediate relief to individuals burdened by medical debt, advocating for systemic changes like "Medicare for All." They highlighted the necessity of enforcing existing policies to protect patients, arguing that healthcare is a human right, not a commodity, thus legitimizing government intervention to alleviate the crisis.
• Key Discussions:
  • Reforming the 340B Program: There was overwhelming support for reforming the 340B Drug Pricing Program to ensure that drug concessions provided to nonprofit hospitals are directly passed on to patients, thus reducing medical debt.
  • Increasing Competition and Transparency: Discussions focused on ways to enhance competition among healthcare providers and improve price transparency before treatment. These measures are seen as essential for driving down healthcare costs and empowering patients to make informed decisions.
  • Policy Enforcement: The importance of enforcing existing healthcare policies was highlighted to ensure that government benefits reach patients directly. Stronger accountability measures were suggested to prevent hospitals from exploiting programs intended for medical patients and consumers.

In-Depth Notes

• Bernie Sanders: healthcare is broken and people are consumed with medical debt. leading cause of personal bankruptcy in the us is medical debt. 1 out of three people with cancer lose their homes, deplete their entire life savings in two years. 1 in 4 skip treatment because they can’t afford it. people with medical insurance also rack up debt. Sanders reads a really awful and sad stories about medical debt. Advocates medicare for all and says we’re talking about short term solutions right now for this hearing.
• Senator Cassidy: We need to think about debt as a symptom of the large cost of healthcare. 340B allows hospitals to give patients discounts for drugs but they’re not actually implementing this program. We can’t cancel all medical debt in one moment because its not longterm. We can’t cancel all debt because it’ll impact taxpayers and the national deficit.
• Senator Cassidy: We are spending 2x more on healthcare than any other.
• Dr. El-Sayed: Wayne County Michigan Director of Public Health seeking to cancel population’s debt. Epicenter of medical debt. In the US we owe 220 billion in debt which is more than the gdp of most states. Providers are raising costs and those costs are being put on consumers. We need Medicare for All really, really badly.
• Dr. Messac: Emergency Physician at Harvard Medical School. Patients worry they will face debt so much they risk their own lives. Patients are right to fear debt. Moral hazard is not a good argument. IRS should use existing authority to allow hospitals to verify patient income before being admitted. We should cancel debt too. We need universal coverage through medicare for all.
• Ms. Allison Boyd: Neonatal Nurse Practitioner. I had premature children and could not afford the care. Had to pay $80k despite insurance. I’ve worked second jobs constantly. 200-300k of costs for most people in my situation that are rarely covered by insurance. We need medical debt cancellation.
• Dr. Chino: oncologist and cancer researcher. My husband had a tumor but we didn’t realize the financial burden it would place on us. We had to pay 1000s for medication, paid for treatments out of pocket, considered moving to canada—collectors called me at his funeral. only years later, I learned I wasn’t respoonsible for his debt but I still get calls. Debt relief is needed now. I support Senator Sanders’ proposals. Medical debt makes health worse. We need Medicare for All. Life over life savings is not okay.
• Dr. Bai: Research focused on health pricing. Professor at Johns Hopkins. If we do not address high healthcare prices, then the problem will continue. 340B hospitals may get discounts but these hospitals mark up prices anyway. Physicians have government restrictions that prevent them from independence. Cancelling is not an answer. We need to correct policy failures. Let’s fix 340B. Let’s create more transparency and integrity.
• Dr. Ippolito: Senior research fellow at Enterprise institute. Policymakers should be realistic and not overly idealistic. Predictions of benefits to reliveing debt can be misleading. Medical debt forgiveness will create more upfront costs which will increase barriers. People will have less incentive to repay debts.
• Senator Sanders: What are the costs of debt? What did debt collectors do to you? A very leading question.
• Dr. El-Sayed: After non payment of debt, the value of debt falls massively. We can eliminate a lot of debt for a lot less than its upfront value.
• Dr. Messac: There are so many problems that come with medical debt.
• Ms. Ward: We got multiple harassing calls a day from debt collectors while our children were still in the hospital.
• Dr. Chino: The calls are very, very threatening and misleading even. These calls will implicate your future ability to do anything and will threaten your home, your assets, etc.   
•           Senator Cassidy: Did the hospitals you worked at implement the policies the government has passed to help patients? ie 340B
•           Dr. Chino: We didn’t receive any aid because we were professors, so we didn’t meet the threshold for aid. We still fell into massive debt.
•           Dr. Bai: These policies are not working in multiple hospitals across the country.
•           Senator Kaine: high medical costs are high burdens on new parents. Parents are more likely to have healthcare debt. How would debt relief have impacted your family?
•           Ms. Ward: With relief, we actually could’ve pursued all the recommendations for treatment that we were given.
•           Senator Kaine: Most hospitals will now be providing government funded dental care. Thoughts?
•           Dr. El-Sayed: Lack of dental care makes you more likely to get other larger conditions and also makes it harder to catch those.
•           Senator Bayed: What are the benefits of stricter accountability with 340B verification?
•           Dr. Ippolito: There are no verification processes now and it would not be hard to create a system.
•           Senator Smith: I believe in universal coverage. We need more transparency. What are the costs of these things? Healthcare price transparency act?
•           Dr. El-Sayed: There is way too much billing complexity and that creates so much overhead cost which really hurts us.
•           Dr. Messac: It is really hard to know how much treatments will cost my patients.
•           Senator Murphy: Hospitals are getting owned by private firms interested only in driving profit. Thoughts on these large corporate entities?
•           Dr. Messac: Very aggressive debt collection happens usually with large corporations.
•           Senator Murphy: Medical credit cards. Do you see this as a problem for your patients?
•           Dr. El-Sayed: there is a large amount of crazy costs going to these people that the hospitals don’t need.
•           Senator Braun: Industry has never had barriers to entry. Healthcare is really hard to regulate. We need more price competition and transparency to drive down prices. We need again more regulation. What would happen if healthcare had full competition and transparent prices? Are we too far gone or can this be fixed?
•           Dr. Bai: We can solve this and the bill you have will help. Buy side and sell side matter. We can drive more innovation through this too.
•           Senator Braun: There are a bunch of senators on this bill and I just want to plug it.
•           Senator Casey: Medicaid has been a lifeline for children recently. We should automatically enroll every child in Medicaid. EPSD would cover everything for the twins if they’d qualified. How would you make the case for this medication?
•           Ms. Ward: Qualification would have helped us so much and the benefits would’ve impacted their development as well as our family’s wellbeing.
•           Senator Hickemoper: Senator Braun’s Healthcare Price Transparency Act is a good idea. How will transparency measures address debt?
•           Dr. El Sayed: There is shoppable healthcare. It can be part of a larger healthcare. It won’t fix everything but it could help with some forms of debt.
•           Senator Hickemoper: What can we do at the federal level to make sure individuals receive savings?
•           Dr. Bai: Individuals need to control their dollar. We need fewer regulations on individuals. Competitive market will force corporations to cater to patients and solve a lot of problems.
•           Senator Sanders: Administrative costs are creating a really big problem. In the US we spend $950 per person on beurocracy and that’s it. Most other countries spend $60-70. How do we solve this complexity and create simplicity?
•           Dr. El-Sayed: We need to cut out the middle man in healthcare.
•           Senator Sanders: Thank you for coming everyone. Committee hearing is over.