Late last month, many North Carolinians received good news in the mail, letters explaining that their medical debt had been forgiven. It’s all thanks to a first-of-its-kind state initiative started last year by former NC Governor Roy Cooper. Cooper and the former Health Secretary, Kody Kinsley, used North Carolina’s Medicaid expansion, which Cooper championed for years, to incentivize all 99 acute care hospitals in the state to join the debt relief effort.
At the time, Cooper’s office estimated that over $4 billion could be forgiven. In a welcome piece of good news, NC Governor Josh Stein announced in October that the program has far exceeded expectations. Over $6.5 billion in medical debt has been forgiven so far, helping roughly 1-in-4 North Carolinians have the chance for a better future.
Hospitals were instructed to focus on debt belonging to low and middle-income families that were unlikely to be able to pay it back. These were people who were hit by emergencies and unexpected illnesses, people who didn’t have a safety net and who were already struggling to make ends meet. As Gov. Stein said in his announcement, “Medical debt is not a choice. Nobody chooses to have a heart attack or get diagnosed with a chronic condition — you just have to deal with it.”
Many of these hospital bills were several years old and were only acting as weights around the necks of hardworking people without the means to repay them, hindering their financial security. By lifting this burden, Stein hopes to “help families regain financial stability, wipe negative marks off credit reports, and access essential health services without fear of long-term consequences.”
Beyond simple one-time debt forgiveness, this initiative creates a path to avoiding the problem from recurring in the future. By expanding the ways hospitals direct qualified patients in need to charity care and financial assistance, far fewer people will slip into unnecessary medical debt in the first place.
As part of the agreement, hospitals will also stop reporting medical debt to credit agencies so that people are no longer trapped in financial limbo. Last week, Gov. Stein sent a letter to the three major national Credit Reporting Agencies (CRAs) – Experian, Equifax, and TransUnion – urging them to recommit publicly to their policies of not including certain medical debt in credit reports.
“At a time when many Americans are just one emergency medical expense away from going into debt, this relief program is putting more than 2.5 million North Carolinians on the path to financial security,” said Governor Josh Stein during a recent roundtable. “We are grateful for our partners in this work who are removing this weight and empowering North Carolinians to live a healthier life.”
North Carolina’s medical debt relief announcement comes as Americans across the country are watching their health care premiums double overnight due to DC Republicans refusal to extend the ACA tax credits. Senate Republicans, along with eight Democrats who broke from their party, voted to fund the government without an extension to the ACA’s enhanced subsidies.
Without the enhanced tax credits, Americans who use the ACA Marketplace for affordable health care access would on average have to pay more than twice as much out of pocket in insurance premiums next year. According to health research nonprofit KFF, Americans may see an 114-percent average increase in the cost of ACA-backed plans. For more information about the participating hospitals and questions about the program, see the the NCDHHS announcement here.
