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Proposed consumer protections for medical debt could face legislative roadblocks

North Carolina State Treasurer Dale Folwell walks through the Republican Governors Association conference, Wednesday, Nov. 16, 2022, in Orlando, Fla.
Phelan M. Ebenhack
North Carolina State Treasurer Dale Folwell walks through the Republican Governors Association conference, Wednesday, Nov. 16, 2022, in Orlando, Fla.

State Treasurer Dale Folwell is calling on North Carolina lawmakers to pass new consumer protections addressing medical debt collections.

Folwell — a Republican who’s running for governor in 2024 — spoke to a Senate committee Wednesday about what he calls the “Medical Debt De-Weaponization Act.” He says families are getting stuck in poverty because of medical bills they can’t afford to pay and that ruin their credit scores.

"People should not fear getting medical attention in this state, and nor should they fear when they open their mail to figure out what things are going to cost them," Folwell said.

He pointed to data that shows that one-in-five families in North Carolina are in the medical debt collection process. If the bill passes, health care providers would have to give patients a written explanation of financial assistance options. And they’d have to disclose the cost of services and the Medicare reimbursement rate.

Debt collectors would also be banned from seeking repayment from a patient’s family members. Unpaid debts wouldn’t affect credit scores until a year after a bill is issued.

Sen. Julie Mayfield, D-Buncombe, says she supports the bill.

"Everybody in this room, probably everybody in this state, has dealt with this issue at some time or another," Mayfield said. "And it’s amazing and unconscionable that this system that we have exists, and I appreciate you all bearing down and getting to the right place."

But while no one spoke against the proposal at Wednesday’s Senate committee hearing, it faces tough odds at the legislature. A similar bill got a single hearing last year in a House committee but never made it to a vote.

That’s because the powerful North Carolina Healthcare Association, which represents the state’s hospitals, opposes the bill.

A spokeswoman for the group told WUNC that the measure is unnecessary because federal and state regulations already provide consumer protections. She says the bill would simply add more bureaucracy to the process. The group argues that a better solution is to get more people insured and make insurance companies more transparent.

"A big factor contributing to individuals receiving medical bills that they are unable to pay are the high deductibles and other forms of cost sharing that affect consumers, despite them being insured," spokeswoman Cynthia Charles said in an email. "Insurance companies should actively work on improving plan designs and coverage to help provide medical debt solutions for their customers."

Folwell says the hospitals' objections are more about protecting health care profits.

"The cartel is very powerful," Folwell said. "And they have spent 40 years building up their power that is ultimately impacted the supply of health care, the quality of healthcare, the access to health care, the price of health care, and now what they do to people's credit scores if they don't pay for this product."

Even if the bill passes the Senate, it could have a tougher time in the House, which typically sides with the hospitals.

Sen. Joyce Krawiec, R-Forsyth, is one of the bill’s sponsors. She’s hopeful the idea could find more support this year.

"I think people are becoming more and more aware of this issue," Krawiec said. "And so often, people just throw things in a drawer, but it's starting to affect almost everybody. So, I think we have I think we have a good shot. I'm very optimistic."

The Senate’s health committee is scheduled to vote on the bill Thursday morning.

Colin Campbell covers politics for WUNC as the station's capitol bureau chief.