North Carolina’s Ambitious Plan to Wipe Out Billions in Medical Debt: A Model for the US?

TL/DR –

North Carolina’s state government has implemented a program that will eliminate billions of dollars of medical debt for patients and impose new standards to protect patients from excessive medical bills. The initiative was initially met with resistance from the hospital industry but managed to gain federal approval and the backing of all 99 hospitals in the state. The plan, which offers a possible model for other states, will erase around $4 billion in hospital debt for nearly 2 million people dating back to 2014, require hospitals to automatically qualify more patients for charity care, provide discounts to low- and middle-income patients, and stop reporting these patients to credit agencies if they can’t pay.

North Carolina’s Ambitious Plan to Tackle Medical Debt

In a bid to resolve North Carolina’s substantial medical debt issue, state officials have been working for months on a bold plan. In July, Governor Roy Cooper publicly advocated for the initiative, aimed at relieving patient hospital debt or risk losing billions in public funding linked to Medicaid expansion. Despite initial resistance and fraught negotiations with the hospital industry, all of North Carolina’s 99 hospitals have now agreed to the state’s terms.

This means that for access to federal money, hospitals will have to forgive billions in patient debt and adopt new standards to protect patients from excessive bills. Founder of national nonprofit Dollar For, Jared Walker, comments that this model could be adopted across the country.

The process was far from simple, with the state having to face resistance from powerful health systems and trade groups. The plan was accused of destabilizing rural healthcare and encouraging legal battles. But support from the Biden administration and the ultimate bargaining chip – funding – ensured its success.

Using Medicaid Expansion to Pave the Way

With one of the highest rates of medical debt in the nation, North Carolina has long had a problem. Credit bureau data analyzed by the nonprofit Urban Institute reveals the issue is most significant in nonwhite communities and in the east of the state.

The recent shift in North Carolina’s health care landscape and the expansion of Medicaid, the safety net insurance program, offered a new way to address the issue – a solution that could benefit not only those accruing new debts but also offer relief for those with existing bills.

Setting New Standards

The state proposed that in exchange for additional federal funding, hospitals would have to eliminate the outstanding debts of low-income patients and change their financial aid policies to help more patients avoid going into debt. However, the threat to hospital funding predictably sparked opposition from the industry’s powerful lobbying arm, the North Carolina Healthcare Association.

Overcoming Resistance

In spite of industry pushback, state officials continued discussions with hospitals and made revisions to address some concerns. In July, they secured approval from the federal Centers for Medicare & Medicaid Services to proceed with the plan. Hospitals had until August 9 to accept the new medical debt standards or forfeit billions of dollars in funding. By the deadline, all 99 North Carolina hospitals had agreed to the terms.

The success of North Carolina’s strategy, to leverage public funds to address a crisis affecting some 100 million people in the US, could potentially provide a roadmap for other states. As Christopher Koller, president of the health policy nonprofit Milbank Memorial Fund, put it, “The focus of health systems should be caring for patients, not bullying them for every last penny to run their business.”Health & Wellness News ; US News