Lamont cancels medical debt
Governor Ned Lamont laid out a sweeping budget proposal to cancel billions of medical debt in Connecticut. But patient advocates for Connecticut’s most vulnerable populations and progressive legislators say this may not be action enough.
Courtesy of Brian O'Connor
On Feb. 8, Gov. Ned Lamont announced a budget item proposal to cancel the medical debt of thousands of Connecticut residents. At the same time, progressive legislators have questioned why residents’ medical debt should exist in the first place, pushing for a bill to examine the costs and benefits of adopting universal healthcare in Connecticut.
According to Lamont’s proposal, the Connecticut government wants to use $20 million of federal funding from the American Rescue Plan Act to cancel an estimated $2 billion in medical debts. The Connecticut government, partnering with nonprofits, would use the funding to negotiate with hospitals and buy out medical debts so hospitals will receive compensation for forgiving the debt that people cannot pay off — a model which governments throughout the United States have already used.
“Medical debt is the leading cause of bankruptcy, and it hangs like a dark cloud as you try to get your health and bank account back in shape,” Lamont said in his budget address. “The ultimate solution to this problem is affordable access to quality healthcare for everybody.”
Debt cancellation still has to go through the Connecticut General Assembly. State Senator Saud Anwar, who serves as the General Assembly’s Public Health committee chair, expressed his excitement about the proposal.
Anwar told the News that medical debt impacts one out of every five Connecticut residents — disproportionately minorities — and he believes it is a shame that so many people file bankruptcy because of it.
According to Lamont’s announcement, this model can “generate more than a one-to-100 return on investment of government dollars,” because “hospitals often sell debts for pennies.”
“Paying the medical debt … would help take care of [people’s] immediate needs [and] protect their credit scores,” Anwar said. “And some of the healthcare systems [that] have been impacted by the lack of payment can survive and then perhaps do a little bit better compared to what they are doing right now.”
Bhargav Ramesh ’23, director of medical debt and insurance counseling at HAVEN Free Clinic, has spent the past three years volunteering for the department and helping the clinic’s patients resolve outstanding medical bills. Ramesh said that this patient population is highly underserved and unable to access care elsewhere without having reservations about costs or immigration status, since a majority of the patients served by HAVEN are undocumented and uninsured.
While the clinic can provide services to this population for free through a guarantor account overseen by the Yale Medical Group, the clinic is unable to offer specialized services like diagnostic imaging or procedures. According to Ramesh, it is a “safety net for the American healthcare system,” and “a last resort” which means that without the clinic, patients often have nowhere else to go. In this case, patients often have to go elsewhere — like Yale New Haven Hospital, or YNHH — for a scheduled surgery or an MRI, expensive procedures which may lack cost transparency for the patient.
“Another reason why patients are racking up debt like this is because they either may not have the funds, or they’re afraid to seek care at a primary care center, or things of that nature,” Ramesh said. “And what this leads to is people delaying care until it becomes something serious, and then you go to the emergency department, you get a really big bill. And this is endemic in American healthcare in general, not just among our patient population, but it especially is something we see a lot.”
According to Ramesh, the department mostly helps patients apply for the YNHH’s financial assistance program or resolves medical emergency room bills worth thousands of dollars. Unlike other programs, Ramesh said, YNHH’s financial assistance sometimes lets patients retroactively waive debt. Most patients qualify for what is called Free Care, where all services they receive at the hospital are free of cost, but the financial assistance program operates on a sliding-scale system, which offers discounted care based on patient income.
However, these services may not have a lot of financial transparency for the patient, as different departments and specialties have differing standards for discounted and free care.
In addition to debt alleviation, the department also works on applications for HUSKY, the state Medicaid program, which provides free services to individuals that meet a certain income eligibility. However, according to Ramesh, this is only applicable for a minority of HAVEN patients because the vast majority are undocumented –– a main requirement of HUSKY is that one must be a permanent resident or citizen to qualify. In the past two years of working at the clinic, Ramesh has only personally done about 10 or so of those applications, as only patients who do not have migratory status issues can apply for government assistance, among other requirements.
“There’s a lot of financial toxicity in healthcare, as you might imagine,” Ramesh said. “And particularly since there’s not a lot of government programs in place that can help undocumented patients receive healthcare, it is especially even more of a challenge.”
Despite Connecticut’s Medicaid program being more “generous” than other states such as those that have not expanded Medicaid, according to Ramesh, the healthcare system is hard to navigate for the average person. Especially with such little price transparency, once an individual faces debt, it can pose a huge burden in their daily lives, making it difficult to think about what to do next if challenged by income, or interact with debt collectors, according to Ramesh. Although Lamont’s proposal aims to alleviate this burden, the insurance system remains difficult to navigate.
“I’d continue to be concerned for populations such as the one we see which are a large majority of undocumented patients who don’t have an understanding of how healthcare or billing for that matter works,” Ramesh said. “So for patients who have very limited healthcare system literacy, or by their immigration status, I really struggle to believe that this could have any potential to help.”
State representative Anne Hughes, co-chair of the progressive democratic caucus and House Representative for the 135th district, believes that medical debt should not exist in the first place.
According to Hughes, Lamont’s proposal is working “on the backend” to solve an issue that most Connecticut families face, due to the way the current health insurance system works.
“What if we just stopped the bullshit practice of medical debt in the first place?” Hughes questioned. “That shouldn’t be a thing. I mean, I’m all for taking 20 million and canceling medical debt, but how about we take 500 million and cover everybody here. How about we do that?”
In 2019, Hughes and other legislators pushed for a bill to expand HUSKY for all as a universal healthcare coverage option. According to Hughes, since 900,000 of the 3.4 million Connecticut residents already access HUSKY, expanding to cover all residents will help hospital systems save more money rather than lose it to uncompensated care. Additionally, Hughes said that Connecticut pays only 3.4 percent in overhead administrative costs.
Hughes cited that Connecticut hospitals already pay $600 to $900 million annually for uncompensated care due to individuals without existing healthcare insurance needing emergency procedures. She suggested that under a system where all individuals have insurance, uncompensated care would be reduced, and that the state could actually pay hospitals for that care.
In January, five progressive legislators, including Hughes, introduced to the legislature House Bill No. 5485, “An Act Concerning a Cost-Benefit Analysis of Establishing a HUSKY for All, Universal Health Care Financing System.”
The bill proposes to require the state government to contract the cost-benefit analysis, which would find the benefits and feasibility of establishing a “HUSKY for all” system in the state. According to Hughes, the economic analysis would allow policymakers to understand how much it would cost for HUSKY to cover all Connecticut residents in a tax-funded, self-insured plan.
State representative David Michel, one of the co-introducers of the bill, grew up in France — a country with healthcare coverage. He told the News that healthcare is a human right in most of the world but the United States. Michel would love to see single-payer healthcare in the state of Connecticut — the one in which all costs of essential healthcare for all residents are covered by the single public system.
Originally, the bill proposing the “HUSKY for All” system was raised in the General Assembly in 2019. However, according to Michel, the state pushed back and required the study to be completed first — the advocates and progressive legislators thus focused on it.
As representatives brought up the analysis bill, Michel said that bill will not be passed by the General Assembly this year. According to him, it is “dead” — the Human Services Committee did not raise it to committee discussion, preventing it from advancing further in the legislative process.
Holly Hackett, a member of Medicare for All CT, an advocacy group that helped with the bill, told the News that every time organization tries to do something that might take away from the profits of the insurance company, “they step up and throw millions […] of dollars into the lobbyism” to block the efforts — which she believes happened again this time.
Michel said there was insufficient support even in the Human Services Committee.
“The chairs let it pass the last time, and it was sent to appropriations with a fiscal bill that really was out of proportion,” Michel said. “And it was just sent to be killed in another committee.”
Michel and other progressive legislators plan to continue fighting for universal healthcare coverage in the State. He told the News that the cause needs more public support and advocacy — especially from students — pushing the Committee to raise the bill in the next legislative session.
“The study really doesn’t cost much money — it costs less than $20,000,” Michel said. “We need a lot of pressure so that this committee accepts to do [it].”
Hughes believes that other states look to Connecticut as an example and that piloting universal healthcare coverage in the state could be scaled up for larger populations in other states or even perhaps the nation. She emphasized that most Connecticut families who aren’t insured by HUSKY or Medicare have had “horrible, lengthy, soul-crushing experiences with their insurers if they have anybody sick.”
“This system is ridiculous,” Hughes said. “It is normalized. And it is not a care system. It is a profit system that is preying on sick people. And I think that younger people and a lot of families are starting to wake up to this and say this is not acceptable … why have we not questioned that the barriers to care have only gotten greater?”
As of June 2021, there was $88 billion in medical debt on national consumer credit records, according to the Consumer Financial Protection Bureau.