State Treasurer backs legislation that would give millions in NC free or discounted hospital care. It faces more review.  

Millions of North Carolinians would be eligible for discounted or free hospital care, even after their insurance was billed, under proposed legislation debated this week.  

House Bill 1039 contains several key proposals:

• People who earn up to 200% of the federal poverty level – this year, that’s $55,500 for a family of four – would receive free hospital care. 
• People in households of four people with annual incomes between $55,500 and $166,500, or 600% of the federal poverty level, would be eligible for discounts.  
• People in households of four people with annual incomes below $110,000, or 400% of the federal poverty level, would receive free hospital care after they’ve paid $2,300 in hospital bills in a year.  

More than six in 10 North Carolina residents were in households with incomes below 400% of the federal poverty level in 2019, according to the Kaiser Family Foundation.  

The bill, which state Treasurer Dale Folwell is backing, includes sections that mirror model legislation the National Consumer Law Center (NCLC) promotes. Folwell, a Republican, is a persistent critic of hospital billing policies. He has challenged hospitals on a lack of transparent pricing and has criticized tax-exempt hospitals for billing patients who qualify for charity care.  

In January, Folwell’s office reported that nonprofit hospitals reap much more in tax breaks than they offer in charity care. The NC Healthcare Association, which represents hospitals, criticized the report, saying in a statement soon after it was released that “nonprofit hospitals are proudly fulfilling their charity care and community benefit commitments to North Carolinians.” 

Unpaid medical debt ends up as red marks on credit reports, Folwell told members of the House Banking Committee this week. “The moral thing to do is to stop weaponizing people’s credit score based on a product they would rather not consume,” he said.  

An Urban Institute report shows that more than one in five people in North Carolina had past-due medical bills that had gone to collections, based on December 2020 data. That’s a higher percentage than the national average. Black residents are more likely to have medical debt than white residents, according to the report.  

“It’s really exciting that North Carolina has introduced this piece of legislation,” Jenifer Bosco, a staff attorney with the NCLC, said in an interview. “It could be so beneficial to patients in North Carolina who have low incomes or moderate incomes who are struggling with medical debt. Medical debt is such a pervasive problem.” 

An NCLC review of state’s financial assistance policies published in November 2021 found a dozen states with what it called “broad financial assistance rules” for non-profit and for-profit hospitals. Some states’ programs require free or discounted care only to uninsured or underinsured patients who meet income guidelines. Only Illinois offers discounts to patients with incomes up to 600% of the federal poverty level who are uninsured, according to the review.  

Bosco said there’s a correlation between less prevalent medical debt and strong hospital financial assistance policies. Medical debt is more pervasive in the southeastern United States, where for the most part, states have not expanded Medicaid to allow low-income adults to obtain health insurance. 

The State Employees Association of North Carolina and the NC Coalition Against Sexual Assault support the bill. While the state pays up to $800 for rape kits, assault victims can be billed for treatment of their injuries, said Skye David, a lobbyist for the coalition. Those bills are a burden for people who are uninsured or have insurance that doesn’t cover all the costs, David said.  

“I’ve looked at survivors’ bills, some are over $6,000,” David said. “If they don’t pay the bill, it impacts their credit score for years and years.” 

The committee took no action on the bill, which has bipartisan support. Committee Chairman Keith Kidwell (R-Beaufort) said the bill would come back to the committee after revisions. There’s likely not a lot of time left to get it passed into law, however. The legislative session is expected to end around July 1, the Associated Press reported.  

In addition to applying discounts, the bill would prohibit reporting medical debt to credit agencies for one year after the first bill is sent.  Hospitals’ financial assistance policies would have to be widely publicized. Hospitals would also be required to screen patients for eligibility for public or private insurance and other programs that may help pay hospital bills, and determine whether patients are eligible for discounts or free care.  

Rep. John Szoka, a Fayetteville Republican, and a member of the House Banking Committee, said the bill would require extensive work by hospitals to check on patients’ financial status. Some of the bill’s requirements are best handled by social service agencies, he said.  

“I think the bill is trying to do a lot of things at once,” said Szoka. “I don’t want to see our hospitals become an adjunct to social services.” 

The NC Healthcare Association does not have a position on the bill, spokeswoman Cynthia Charles said in an email, but it has a number of concerns about it. 

“We have significant concerns that this bill would cause hospitals to absorb millions of additional dollars in uncompensated care,” she wrote.  “That, in turn, could increase the cost of care for others.” 

Each of the nonprofit hospitals and health systems in North Carolina have financial assistance and charity care policies that are printed on bills and publicized in other ways – on their websites, in brochures, and in conversations with patients, she wrote.  

A 2013 state law sets out rules for collection of medical bills, Charles wrote, and a federal law covers debt collectors’ behavior. “Additional guidance does not seem necessary,” she said. 

William Brewer, a lawyer who specializes in consumer bankruptcies, said medical providers have become less aggressive over the years in seeking to collect debts, but often those unpaid bills are part of an accumulation of debt that pushes people to file for bankruptcy. “For a lot of clients, it plays a more indirect role,” he said in an interview. Often high medical bills mean that people have been unable to work because of illness, or were out of the workforce caring for a family member.  

The bill would make an important change by relieving married people of responsibility for spouses’ medical debts, he said in an email. The jointly held debt is detrimental to couples who want to protect jointly owned real estate from creditors. The section of the proposed law that says married people would not be responsible for each others’ medical debt “would be very beneficial in assisting citizens in protecting their residences from medical creditors,” Brewer wrote.