Medical debt protections considered

Interest on medical debt would be capped in Nebraska under a measure considered Feb. 18 by the Judiciary Committee.

LB779, introduced by Lincoln Sen. Danielle Conrad, would prohibit health care facilities from charging interest or late fees on medical debt until 90 days after a final invoice is issued and would cap interest at 3%. The measure also would bar creditors from placing liens on or foreclosing upon a patient’s primary residence to collect medical debt.

Conrad said the rising rates of uninsured and underinsured individuals — many due to loss of Medicaid coverage and federal policy changes affecting Affordable Care Act tax credits — are increasing out-of-pocket medical costs for Nebraskans.

LB779 would provide a state-level response to these federal health care challenges, she said, helping families manage medical bills while protecting their primary residences from liens or foreclosure.

“Medical debt has become one of the most common forms of consumer debt in our state and nation and, far too often, hardworking families are [faced] with high interest charges that can escalate otherwise manageable bills into long-term financial stress,“ Conrad said.

Cami Bergman, a Nebraska mother of four from Valley County, supported the measure. Despite having insurance and community support during her daughter’s cancer treatment, she said, medical debt continued to mount even after treatment ended, creating lasting financial strain and stress for the family.

LB779 would give families facing serious illness breathing room, she said, and help ensure that doing what is necessary to survive cancer does not also involve a family risking financial ruin or losing their home.

“No parent should have to choose between follow-up care and keeping a roof over their child’s head,” Bergman said.

Testifying in support of the bill on behalf of Nebraska Appleseed, Sarah Maresh said medical debt is a major barrier to health care even for those with insurance.

Debt is expected to rise due to Medicaid cuts and the loss of marketplace tax credits, she said, which will disproportionately affect people of color, rural residents, new mothers and those in poor health.

“Medical debt is just different than other types of debt and it should be treated that way,” Maresh said.
”Health care is a necessity, but people rarely have choice or power when it comes to their spending. We can’t predict [when] we’re going to need care.”

Tessa Stevens opposed the bill on behalf of the Nebraska Collectors Association, saying hospitals and collection agencies generally do not charge interest on initial medical bills or foreclose on primary residences.

Stevens said capping interest at 3% could threaten small, rural hospital loan programs, and the bill fails to distinguish between patients in financial hardship and those who are able to pay.

Representing the Nebraska Health Care Association, Abbie Widger also testified in opposition to LB779. She said the association is willing to work with Conrad on an amendment, but that the bill as written could unintentionally harm elderly Nebraskans in long-term care by interfering with Medicaid spend-down rules.

Widger said that when a resident has an outstanding medical bill and a deed of trust on their home, Medicaid considers that debt for eligibility purposes and the provider is paid when the home is sold. The bill’s broad language could disrupt that process and limit seniors’ access to Medicaid, she said.

The committee took no immediate action on the proposal.