night april 30 on c-span. c-span radio, c-span.org and the c-span now video app. >> c-span is your unfiltered view of government. we are funded by these television companies and more including cox. >> cox is committed to providing eligible families access to affordable internet through the connectivity program. bridging the digital divide one connected student at a time. >> cox supports c-span as a public service along with these other television providers giving you a front row seat to democracy. >> up next on c-span, a look at the impact of medical debt on patients. that is followed by white house national cyber director talking

about global threats and election security. later, white house press secretary jen psaki is asked about the recent court ruling that struck down mask mandates for public transit. next, a look at what congress can do about health care and medical debt. patient advocates and health care officials testify. this is about an hour and 20 minutes. >> committee on banking, housing and urban affairs will come to order. today's hearing is a hybrid .

whether your husband, mother or child will make it out of the hospital and whether their health problems will continue. at the cost -- as the cost of prescript drugs rise, bells skyrocket. debt collectors start calling families. families all over the country are telling us that. we heard from penelope wingard,

and after schoolteacher from north carolina who lost her health coverage while battling breast cancer. her doctors eventually stopped seeing her. soon after, she had an aneurysm. because of a financial situation caused by her diagnosis, she was forced to wait and then seek care from a limited list of providers who were allowing sliding scale payments. debt collectors call her. they harass her everyday. her credit is ruined because of her health. she needs additional testing to ensure cancer is not returned. instead of focusing on battling her illness, she has to figure out how to handle debt collectors. she is far from alone. in the united states, 43 million americans hold $80 million of medical debt. it can happen to anyone. low income families, black and

hispanic households, older adults are hit particularly hard. debt collectors make this exhausting experience worse. they make threats up your the contact patient employers. take mindy from delaware county, ohio. she has had type one diabetes since she was five. for most of her adult life until the passage of the affordable care act, she was unable to get health insurance because she had a pre-existing condition. after losing her business under the 2008 recession, her medical bills piled up to that is when the debt collectors started calling and calling. she did her best. she tried to negotiate. she begged for relief but the harassment continued. she said she was afraid to leave her house. this harassment is part of the business model. a counselor of a medical debt agency had some choice words about harassing patients. they said they found the first

20 to 30 calls to be highly effective. if the calls don't work, debt collectors move on to even more aggressive tactics like litigation forcing people to go through expensive, emotionally draining court proceedings often while still battling cancer or grieving a loved one. patients can result in a garnished wages or property leaves. we have seen people thrown in jail because they could not afford to pay. it is the return of debtor's prison. people in the united states of america today are in jail because of medical debt. whenever we find suffering, wall street finds opportunity. private equity firms are making inroads in the debt collection market should between 2015 and 2016, 1 third of all collection agency acquisitions were bought by private equity. those firms exist to maximize

investor profits no matter the cost to society. maybe that is why private equity owned debt collection agencies are responsible for an outsized number of consumer complaints. we must address the growing crisis of medical debt burgeoning american families. president biden as a administration are working to remove barriers. no one who has served his country should be saddled with debt for illness or injuries incurred in the line of duty. the biden administration wasted no time in ample many been no surprises act which took effect january 1. the law finally been surprise medical bills. one way to prevent harassment is to protect people from debt in the first place. this etf be is doing important work exposing abuses americans face while trying to get health care. after increasing scrutiny and pressure, the three credit reporting agencies all announced

they would significantly change how medical debt collection debt is reported. it is a positive first step but just a step. this first step gets to a basic fact we too often ignore. medical debt does not correlate with credit risk. it correlates with illness. anyone can get sick. anyone can get in a car accident. no one should be forced into poverty. no one should be harassed by shady debt collectors because of a medical emergency or sick family member. we have taken important steps to protect americans but we can do more. i'm acting -- i'm asking the cfpb to create position for consumer medical debt. it is why expanding medicaid coverage to those who live in the 12 states who have refused

to expand medicaid under the affordable care act is long overdue. i am appreciative of two members of this committee who are working to get this done either here or in their state. meeting these challenges cannot be done by government alone. private industry must act. this country needs private institutions to meet their obligations of financial assistance at a no surprise act. your hearing from two -- we are hearing from two consumers. robin came from cleveland. she would tell her story about bodily medical debt after a nursing home cared for her mother. no one should have their financial future ruined simply because they got sick. thank you, mr. chairman. pricing risk accurately is critical to the safety and soundness of financial institution and consumer ability to access affordable credit.

when borrowers default, lenders have to absorb the cost. that's why lenders generally look at information about credit history. lenders who cannot access information they consider predict of risk are likely to restrict lending to borrowers, seek out relative proxies for information they are not able to obtain, or increase the price of loans to all borrowers capture uncertainty and risk. this hurts all consumers is usually low income families. the government should not suppress the reporting of accurate credit information. so-called consumer groups and allies have sought to remove this and make the reports less accurate. i'm afraid this will have adverse and unintended consequences. today's hearing is titled "the growing burden of medical debt

." that's an inaccurate title. the evidence suggests that medical debt and collections last year was $88 billion. that's a reduction of 10% over the last three years. average medical debt and collections fell by 40% in the last decade. that is despite the fact that over the same timeframe, medical spending increased 70%. over 50% per capita. this is illustrated on chart one behind me. there are likely many reasons for decline in medical debt. a likely driver was the improving economy. after the tax reform of 2017 those with the lowest wages, most likely to have medical debt, were making the biggest gains in income. another driver in decline was obama and medicare expansion. for every $25 spent on medicaid

expansion, medical debt and collections decreased by one dollar. there are any aspects -- many aspects who have made me question the efficacy of medicaid expansion but unsurprisingly, if you are willing to spend massive amounts of other people's money, you can transfer individual debts to the taxpayer. that's illustrated in chart two. all available evidence suggests no growing burden of medical debt. the scale of medical debt is often misunderstood. chart three illustrates that medical debt represents less than 1% of all household debt. to third -- two thirds of medical debt collections is under $500 and bankruptcy is extremely rare. three 100th of 1% of the population suffers bankruptcy

every year as a result of hospitalization. every health care system in the developed world includes some out-of-pocket payment. even before medicaid expansion, the likelihood it would exceed a quarter of one's income was as rare in the u.s. as in canada or the u.k. and rarer than italy, spain, and switzerland. recently credit reporting agencies announced changing that would reduce the amount of medical debt that appears on consumer credit reports going forward. if the reporting agency decides to exclude the information, i do not think it is the government's role to meddle with the decision. if reporting agencies decided the opposite, if they decided they began at the same time to add consumer medical debt information onto reports, i suspect protests about greed and

collusion would have been deafening. it appears that a political campaign will lead lenders and credit agencies into removing the information. this misuse of power has grown too common. it is an example of how congress has become too comfortable with the executive branch seizing the lawmaking authority of congress. we need to be careful that this does not make matters worse. this new policy does not know the cost of medical care. it would either raise cost or reduce access and manned up discouraging people from paying medical bills and leaving health care providers on an obvious means to pay and cause credit agencies to use other metrics that are less accurate and could hurt low income populations more.

these downstream effects would not be shocking given the effort to micromanage credit ratings is coming from an agency that has no expertise on complex medical billing and health care systems. intervention into the market will have consequences, usually, unintended. intervention should come after careful deliberation by the people's representatives, not unelected bureaucrats. thank you, mr. chairman. >> i will introduce today's five witnesses. robin king is a former second grade teachers assistance in cleveland. ms. king uses her voice to shed light on the terrible toll medical debt is taking on average americans. emily student -- stuart is overseeing advocacy of consumer health care rights. she has two decades of experience in health care advocacy.

dr. benedict studies health care financing in the pharmaceutical market and the for channel -- personal finances of americans. at the american enterprise institute. david is a professor of law and policy at georgetown and an adjunct scholar at the cato institute. he has served of the chair of medicine -- of -- a portfolio that includes consumer medical debt policy and energy policy recently published a report examining the racial wealth gap and the racial health cap and the harms of aggressive medical debt collection. i will begin with ms. king. welcome. >> good morning.

it's an honor to be here today. i'm privileged to share my story with the committee. i want to speak about my experience with medical debt, something that effects thousands of people in the country every year. i know firsthand that the consequences of these burdens can be debilitating. i was lucky to get help but many people are not so lucky. for them and others that have yet to be victimized i share my story. i am a mother of three. i worked as a teacher's assistant for three years and recently transitioned to working part-time at a learning center. i volunteer with children and older adults in my spare time. i am the youngest of six children who all care deeply about our mom. if you ever brought a parent or loved one to a nursing home knowing you are trusting their care and comfort to strangers, that is something you are never forget. because my mom was suffering

from alzheimer's and had difficulty understanding what was happening my siblings and i decided i would be my mom's representative for all the paperwork that allowed her to be admitted to the facility. my social security checks were used to pay for her portion of the nursing home bill. medicaid covered direct. i made sure to check the box on the form that said i did not agree to be personally liable if finances for my mom's medical care ran out. i have a house out of my own. in november 2019, the staff told me my mom's medicare needs to be reinstated so i filled out some more forms. i did not hear anything about medicaid for months so i assumed everything had been taken care of. i was shocked when the nursing home told me that mom's medicaid had not been reapproved and i

was responsible for paying a huge bill. why hadn't they told me this months ago? how could they have kept this from me when i did everything they asked me to do? maybe we could have figured out a way to prevent them from coming after me for this debt. because the nursing home took so long to tell me medicaid stopped paying mom's bills, the amount had grown huge. they were trying to collect almost $70,000. the nursing home started sending bills each month, every bill larger than the last. my mom passed away october 3, 20 20. two days earlier, i received this was being sued by the nursing home for close to $80,000. i never had time to grieve. the stress was unbearable. i thought, i will not be able to afford my mortgage. i'm definitely going to lose my house. i could before to live on a reduced income when money was already tight. what will i tell my kids?

what does it mean to have this kind of judgment against you? how will that impact my life? i thought, i would rather be with my mom. i had nothing to give. the lawsuit made no sense to me since i told them i would not be personally responsible for my mom's medical expenses. on my sister's advice, we called cleveland legal aid. i'm grateful for my attorneys help because they freed me from having to pay the nursing home dad with my own money. the nursing home is still pursuing my mom's estate so it is still impacting my life. while i am not personally on the hook, they are going after my family's assets. i hope you can take action to protect people like me and not allow medical debt to upend people's lives. medical care is not something we can opt out of. getting sick should not force people to face crushing amounts of debt. i thought i had done everything right and taking care of my mom but without cleveland legal aid, i would have had an enormous the

judgment -- an enormous judgment against me. there must be a better way to take care of each other and not leave people like me facing life-changing amounts of debt. there is no excuse for this in america. i hope my testimony today will help you turn my story into something positive. thank you. chair brown: thank you. ms. stewart, welcome. ms. stewart: good morning. thank you for having me. community catalyst is a nonprofit organization that is dedicated to building the power of people to build a help system -- health system where health is a right for all. we have worked at the forefront of local state, and national conversations to make the system more responsive to people and over that time, one of the major takeaways from our work has been the connection between people's health and their financial

well-being. there is no issue that shines a brighter light on this issue than medical debt. it is important to put medical debt and its context. our health system is imbued with inequity and harms us all. billing and collection is complicated and confusing, but individual people who are put in the position of resolving that complexity, whether it be figuring out whether they were owed, they owed bill to begin with, or navigating a dispute between the health plan and health care provider. there are many sources of medical debt but the largest from dental and diagnostic tests such as x-rays and mri's. 40% of americans say they are more fearful of medical debt than a serious illness. the census bureau estimates that 17% of u.s. households will medical debt. other studies have higher estimates and it is possible that the most people know someone who has been impacted. i decided to survey my siblings,

i have seven of them. five of us have had medical debt in the thousands ranging from er visits, pregnancy-related care, and surprise bills. medical debt impacts some more than others. people who are uninsured are more likely to have medical debt and many are living in states that have not expanded medicaid and due to discriminatory barriers to affordable coverage, there a disproportionate effect on people of color with 27% of black households and 90% of latinx households reporting medical debt. -- 19% of latinx households reporting medical debt. families with a member who is disabled are twice as like you to have medical debt. medical debt can have a profound impact on people's well-being. 37% of people with medical debt have used up all of savings. 31% took under credit card debt. 11% took out a mortgage against her income.

people reported reducing spending on clothes -- food, clothing, and other heisel items. people with medical debt -- people without medical debt are less likely to have depression and anxiety. a story surfaced of a man who had work authorization in the state, he was rushed to the emergency room with covid-19 and was charged $11,000. the hospital denied him any financial assistance even though he was eligible under state law and even the federal assistance was in play. he played -- he paid 11 -- he paid $1000 each month because he was afraid his bill weld impact his ability to buy a home. whether a person's medical bills problems hinges on who holds the debt.

nonprofit hospitals are required to offer financial assistance under committee benefit standards. many are unaware of these programs and not informed upon receipt -- upon receiving their first bill. for many, the headache begins when the bills are sent to third-party collection agencies. these agencies are paid a percentage of the debt they collect, they report the credit to the credit bureaus and pursue legal action. numerous press reports have detailed people having their wages garnished, inc. accounts frozen, or liens put on their homes. medical debt can ruin people's credit rating. the data is often inaccurate or out of date. an analysis showed nearly two thirds of collection complaints assert that that was never owed, never verified, already paid, or discharged in bankruptcy. proposals to address this issue are multifaceted but there are a few to highlight. senator brown, community

catalyst supports medical debt complaints. it is important to eliminate unpaid data and hold credit reporting agencies accountable for accurate data. it is important to strengthen nonprofit community benefit standards, prohibit wage garnishments, and apply those to for-profit hospitals. extending medicaid coverage to people who are living in states that have yet to expand medicaid. thank you for hearing this testimony. chair brown: fink e. dr. ippolito. dr. ippolito: i'm going to echo some of the comments we heard. medical debt is different than other core -- other forms of data. consumers are not taking on debt intentionally. it reflects features of the health care system that attracts justifiable criticism. it is expensive, complex. the extra attention is understandable. as policymakers consider the

escher, it is important to grasp the reality of medical debt. many of us think of medical debt as reflecting events that are unexpected health shocks that give rise to large bills. while those debts do exist, they do not appear to be representative of the typical experience. medical debt is a common phenomenon that seems to reflect more typical interactions with the health care system. 17% of adult americans have medical collections on the credit report. the average medical collection is $300. for a lot, that it's relatively modest and i don't mean that is unimportant, modest in the sense that the bills window can happen. aggregate consumers get $100 billion in medical debt alone. 92% of those medical collections are never reported as paid.

these affect household finances. most essentially, they can lower credit scores. that makes it harder to borrow. many have called that it's a question so it is with considering what policy changes are warranted. credit scores are meant to summarize credit worthiness or if they are not doing that accurately, they are penalizing consumers for things they cannot control. those are things we ought to address. a medical debt that is incurred because of confusion over a billing process but is later repaid surely carries less predictive risk about future credit risk than a bill that is willingly incurred and goes unpaid for a long time. policies that would distinguish between paid versus unpaid medical collections would help consumers who are inappropriately penalized. some argue in favor of policies that go further and disallow reporting of otherwise accurate medical collections. credit bureaus have announced a policy that would do that but

the majority of medical collections resume. those policies, with unintended consequences that i think are important to flag for policymakers who are interested in these policies achieving the stated goals. while medical collections are less predictive of future repayment risks, that is not mean they are not predictive. we have to think about from the perspective of a lender, there's a risk they place some value on that is not eliminated, is obscure. how are they going to respond? there are a couple potential ways. you might try to put more emphasis on other things that appeared on credit records that are not medical collections but you think are indicative of similar risk. other kinds of delicacies. it is not obvious that the distributional consequences of that reaction are better than the status quo. if they don't think they can find a clear proxy, they may increase the cost across all

consumers or in some cases you may change your lending habits particularly in populations where you think there is a high risk and where it is harder to proxy. young consumers carry a lot of medical debt. they also have thinner credit files. that is the kind of population where you may be concerned about that adverse reaction. these trade-offs sound a little academic or theoretical but they are reminiscent of real-world issues that we see in the health care market where we try and achieve similar things. health insurance premiums can vary with health status. that is motivated by equity concerns and has a similar flavor to what we are talking about. we are trying to help people who have this unexpected health shock that they cannot necessarily prevent. it distorts noise and cereals in the market and creates instability. we have to be vigilant of risk

pulling issues. we have to be vigilant about unraveling incentives that distort the stability of the market. if the market is not stable, if we do not have products that are readily available, that x anyways -- that extend which these policies. this is to say that there are potential unintended consequences that we should be aware of. thank you for having me. chair brown: thank you. professor hyman. prof. hyman: members of the committee, thank you for inviting me to speak. i am a professor at georgetown where i teach consumer protection, a course entitled how to regulate, so this is something i think about a lot. i am a health law and policy person. i have also been the victim of identity theft and had to deal with medical bills for myself and my kids.

the difficulty of going forth when we've got a distinguished line of speakers is to say a lot of what i wanted to say has been said so i will focus on a couple issues that have not been flagged. first, you hear numbers turnaround and those numbers walk widely. we have heard figures ranging from $89 billion to $195 billion in medical debt. when you see that range, you should conclude that there is uncertainty as well as variation in the way in which people are measuring things and that is what is going on. methodological choices and uncertainty matter. the most common approach to quantifying the problem of unpaid medical debt involves looking at credit reports and those reports flag certain things as coming from medical providers that are in collections. that is a series of limitations

you ought to be aware of. most of these studies involve data from a single credit reporting agency in the same information is not necessarily reported to all the agencies. the accounts that are in collections are a subset of all accounts, particularly given the time lag in reporting. the additional problem that is not appreciated is the designation of medical debt obscures the reality that patients often use providing of strategies to pay for their health care bills including pending using traditional credit cards, medical credit cards, taking out home equity loans. if those go into collections, even though they are attributable to an underlying medical cost, they will not be flagged as medical debt. the alternative uses surveys including data gathered by the census that has some advantages and some disadvantages. the short version is the numbers

that you hear reflect a specific set of assumptions about what does and does not count as medical debt. the second point is medical debt is a function of multiple interactive factors. you can start with whether someone receives health care, how much they are billed for it, how much is paid for or discounted, that includes insurance, self payment, charity care policies, and all of those are moving parts that affect whether any individual with any set of circumstances has medical debt and how much. the third point is that modifications to credit reporting and medical debt may provide some relief but as dr. ippolito said, you should be wary of the unintended consequences. it is a solution to a symptom,

not the underlying problem. that is the last point i want to emphasize. the reason why we have medical debt is health care in the united states is expensive. if you want to address the problem of medical debt, you should treat the underlying cause, the disease, rather than the symptom and focus on ways to make health care less expensive. i flagged two possible strategies but there are others, one of which is pushing hospitals to floor fully implement charity care obligations, nonprofit hospitals which have had an obligation to do that under state and federal law. to the extent hospitals are a major source of these bills that result in medical debt, that is going to be an important tool that exists. second, i want to acknowledge that congress has taken a step in addressing some aspects of medical debt with endo surprises

act -- with the no surprises act. there are additional strategies as well. it is important to keep your eye on the ball, the ball is high health care costs that result in these problems and those problems are disproportionately borne by certain portions of the population. chair brown: thank you. ms. haynes, welcome. ms. haynes: i appreciate the opportunity to testify. i provide my testimony on behalf of the low-income finds of the national consumer law center. we believe medical debt poses a problem disproportionately impacting black and latinx families. we provide protection to prevent medical debt at the outset and shield consumers from harmful debt collection practices and impacts on their well-being.

medical debt represents more than half of all debts and collections and remains a leading cause of bankruptcy. i live in georgia where i have worked with consumers and seeing up close the impacts of the medical debt crisis. 19% of georgians have medical debt, 70% of white georgians and 21% of nonwhite georgians -- 17% of white georgians and 21% of nonwhite georgians. 70% of white ohioans -- 17% of white ohioans and 21% of nonwhite ohioans. consumers with medical debt face aggressive debt collection. families train their savings, increase their credit card debts, they turn to deceptive products like medical credit cards and high-interest loans. medical debt often appears as other forms of debt in credit history, it likely has a larger impact than data shows.

aggressive debt collection takes many forms. hospitals turned bills over to third-party debt collectors you may use abusive and harassing communication to pressure consumers to pay. medical debt is the most common type of data about which people are contacted by debt collectors. debt collectors contact black household at twice the rate of white households. in some cases, health care providers, hospitals, and debt collectors filed lawsuits against the consumer. they may use these two seek liens against homes, varnish wages, sees thank accounts, and seek civil arrest warrants. between 2009 and 2018, hospitals in maryland filed 40,000 losses that resulted in wage garnishment. often from their own employees. john hopkins alone saw $4 million in wage garnishment lawsuits between 2009 and 2018.

it has a service area that is 45% black. the university of virginia hospital system has a history of relying on property liens. as a result of that, the system cancel decades of liens placed on low-income patients. a medical center enrichment, a majority black city, filed the most lawsuits of any hospital from 2018 to 2020 according to researchers from johns hopkins. the aclu documented cases of arrest from medical debts in several states including maryland, tennessee, and arkansas. in maryland, they observed patients being jailed from medical debt for less than $1000. the result of these practices revived debtors prisons which should be a legal. these collection tactics harm

not only financial well-being, but their physical and psychological well-being. consumers may forgo or delay medical care because they fear medical debt, which can harm your physical health and lead to greater expenses in the future. carrying debt and being subjected to these practices causes psychological distress, increasing anxiety, depression, substance use disorders, and other mental health disorders. all of these can lead to greater medical bills and debt down the road. to address this epidemic, we ask that you focus on ways to prevent medical debt so seeking health care does not send individuals into a financial tailspin. we ask that you consider consumer protections that address racial disparities. band wage garnishment, bank account seizure, foreclosure of homes based on medical debt and civil arrest warrants. prohibit debt collection during

health insurance appeals in the practice of turning over medical debt to third-party providers. enacting universal public they funded single-payer health plan. there is more detail on these recommendations found in my written testimony. i thank you for the opportunity to testify. chair brown: we will begin the questioning with senator warnock who has been advocating for medicaid expansion. you are recognized. >> thank you so much, it is good to see our witnesses, particularly ms. haynes from georgia, and thank you, mr. chairman, for letting me go early due to my presiding obligations. the affordable care act allowed states to expand medicaid to over 30 million americans.

this is transformational legislation for our country, but there are still 646,000 georgians unable to access free and affordable health care because state politicians continue to prioritize politics over people. i have been fighting for medicaid expansion before i came to the senate and when i arrived, i fought hard to get further incentives for georgia to expand medicaid, which we won in the american rescue plan and the state continues, state politicians continue to refuse to expand medicaid in that loss to the state in the six to the 46,000 georgians in the medicaid gap. i introduced the medicaid saves lives act, which would give folks in states like georgia access to health care and i'm fighting to close the coverage gap to make sure everybody, no

matter your zip code, has access to health care. ms. haynes, do we tend to see more medical debt in states like georgia that have not expanded medicaid, then states that have expanded medicaid? ms. haynes: that is correct. households in the south carry more medical debt and other regions. this is the region where medicaid expansion has not really happened. the 12 states that have not expanded medicaid, hr in the south. that has left many uninsured, particularly black folks, also many southern states have a high percentage of for-profit hospitals that are not subject to the charity care provisions. the uninsured rate in the south is connected to the lack of medicaid expansion and connected to the increasing levels of medical debt. sen. warnock: you see a link between medical debt in states

like georgia and its refusal to expand medicaid? sen. warnock: absolutely. -- ms. haynes: absolutely. georgia has the third or fourth highest uninsured rate in the country. i work for clients in georgia who are underinsured or uninsured facing medical debt in trying to figure out whether they need to file bankruptcy, trying to figure out how they can negotiate some payment plan. it is at crisis levels in states like georgia. sen. warnock: thank you. medicaid expansion is something i am focused on and i will keep pushing for that. also capping the cost of prescription drugs would be helpful. according to the kaiser family foundation, one in 10 adults what 23 million people owe medical debt and american families collectively owe $140 billion in medical debt.

in georgia, there's over $120 million in medical debt for 108,000 folks. people should not have to choose between getting the prescription drugs they need and groceries. this is why i introduced the capping prescription drug cost act and the affordable insulin now act, which would cap out-of-pocket drug costs for americans. ms. stewart, how would proposals that cap out-of-pocket drug costs alleviate or help alleviate the medical debt crisis? ms. stewart: thank you, senator, and community catalyst support your legislation. it is clear based on the testimony of many people here that it is under among health-care costs and inability to afford health care is a driving factor. kaiser family foundation found that of people who have incurred medical bills that they cannot

afford, 53% connect them to out-of-pocket prescription drug costs. efforts like the one you are undertaking would help the underlying issues and alleviate the burden. sen. warnock: kaiser has done work in the past on the impact of georgia's refusal to extend medicaid on the georgia economy. it is a drag on people's health care, on the georgia economy. is that correct? ms. stewart: that is correct, there are many studies showing the connection between medicaid expansion and improving economic well-being. sen. warnock: we would do well to extend medicaid in the 12 non-expansion states or have federal data station to make sure states -- folks in those states can access a medicare-like program and we would do well to cap the cost of prescription drugs, a net gain for the georgia economy and for people's health care? ms. stewart: absolutely, it would help millions of people. sen. warnock: thank you.

chair brown: senator toomey is recognized. sen. toomey: dr. he polito and professor hyman, let me address this to two of you. i think you touched on this but i want to be clear. can credit reporting and data collection policies solve the underlying problem of high or unexpected medical debt or without require health care policy change? dr. ippolito: i'm going to echo something professor hyman said but the challenges we are dealing with, medical debt reflects something, it reflects something mechanical, a bill was not paid obviously but it reflects the fact that there was a bill that was expensive and inability to pay at. if we are trying to address this through credit reporting changes , if we have not changed the underlying risk that the lenders are responding to, the lenders

are going to respond, we have to assume they will respond to some risk they cannot observe. we are going to see some response and that is where i worry about the unintended consequences. prof. hyman: i would echo that. you should think separately about the bills that have been accumulated versus the bills going forward. i do not think changes in credit reporting practices meaningfully change the debt that is owed, although they may change the visibility of that debt. if you don't do something about the cost of health care, we should expect future medical debt to compound itself rather than addressing the root cause of the problem. sen. toomey: this is one of the reasons that i am concerned that the cfpb seems to be pulling on this, they have no authority to make changes to health care policy, they do not have expertise in health care policy. they are not going to address the underlying problems. let's talk about the effects of

suppressing information. i understand that there might be categories of medical debt that might not be predictive about a person's credit readiness. -- creditworthiness. something like hospitalization for a car accident is involuntary, unusual, could be expensive. on the other hand, i believe somebody pointed out that a large majority of unpaid medical debt is under $500. which seems to suggest that something closer to a more routine medical expense and failure to pay that, maybe that tells us something different, a different predictive value. can you talk about the

differences between different kinds of medical debt in terms of their predictive value and the unintended consequences that could emerge if that which has predictive value is suppressed and is obscured? dr. ippolito: you point to one of the big challenges when you look at the data on this topic, the distribution of medical debt often does not look like what you are expecting. many of us are thinking car accident, the unavoidable thing that generates a huge ballot, it is easy to understand that. but that is atypical when you look at the credit profiles. the typical experience is the median medical collection is $300. $310 can be generated and a lot of health care interactions that are not a catastrophic situation. your question speaks to the way i think about this topic which

is we are seeing something that is an interaction between two things, one is a health care component obviously but there's also a personal-finance component. if you are seeing $300 bills, $100 bills not getting paid, it is not obvious to me that the answer is, it is obviously a health care problem per se. the cost pointed notwithstanding. it seems to me we have a personal-finance problem. suppressing information on the credit panel is not going to get rid of that risk, it is just going to hide the risk. we know people are going to respond. that is the tension i see. sen. toomey: professor hyman? prof. hyman: it is hard to infer much about the credit readiness of an individual -- creditworthiness of an individual based on the medical bill they received, especially if you are looking at bills in isolation when a single encounter with the health care

system can result in multiple bills, each of which might be in collection. the dollar amount is informative of the distribution but does not tell you much about whether there has been an income shock or ability to repay has been affected. you need more information. chair brown: senator warren is recognized. >> thank you. this is an important hearing. medical debt is the most common form of debt on consumer credit records, it represents 50% of consumer debts listed on credit reports. as much as $140 billion fee would for the nearly one in five americans with medical debt in collections who are disproportionately black and hispanic, it means facing aggressive and often predatory collection practices that can ruin your credit and drive you into bankruptcy. it also means when it damages your credit score, it drives up costs for mortgages, credit

cards, and other financial products. medical providers often outsource the debt collection to other businesses. one of the big players to pop up is, surprise, private equity. giant private equity firms has slipped their chemicals across the health care industry, spending about $750 billion over the last decade to buy everything from hospitals to ambulances to the companies that bill patients and track them down to collect those debts. ms. haynes, you are an expert on medical debt collection practices and the impact on families. how would you characterize private equities collection practices? does it have a good track record of following the law and doing right by consumers? ms. haynes: private equity hospitals and debt collection are as much a part of the problem in the medical debt crisis as the other players.

they are aggressive in their practices, they filed lawsuits against patients, they harass them, report their data to cra's even when a debt is not owed. they are as big a player in the crisis as any other player. i should say that these are aggressive debt collection practices involving beans on homes are particularly damaging. hospitals, once they seek a lien on a home, it can damage the persons current asset value and housing stability. sen. warren: i want to underline one of the phrases you use. including when the debt is not even owed. i would like to know how much of those $300 medical bills are not even owed. but debt collection is an ideal business for private equity because their business model rests on squeezing companies and people dry.

the standard playbook is by a company by building it up with that, squeeze the company to extract profits, then take the money and run after a few years. in the medical debt collection business, that means doing whatever it takes to collect as much money as possible from patients and do it as fast as they can. it is no wonder that private equity is gobbling up medical debt collection firms, building them up into consolidated debt collection giants. private equity has been behind as much as one third of the acquisitions of these companies. ms. stewart, you have worked to protect consumers across the country from predatory practices. in your view, is the consolidation of medical debt collectors under private equity ownership likely to be in consumers' best interests? ms. stewart: you noted the

objective of private equity is to make big profits and attract investors. the world of health care delivery, private equity has meant buzzing health care costs, particularly for people. if past practice as a protector of the future, it is unlikely that private equity consolidating medical collection practices is going to be a good thing. sen. warren: thank you. adequate debt is one of the biggest threats to families. i'm grand -- i'm glad that cfpb has taken steps to reduce this risk including by pressuring the big three credit reporting agencies to clear up to 70% of medical debt from credit reports. this is going to boost scores for millions of americans. but we also need to crack down on the role that private equity firms are playing in the crisis,

whether that is providing care, building, or debt collection. my stop wall street looting act would better align incentives between private equity and the companies they take over in order to protect patients and their labs, financial and otherwise, and make sure that they are not ruined by corporate greed. this is an area we need to work on. thank you. chair brown: senator telus is recognized. >> thank you to the witnesses for being here. i know there are some people who think that cfpb wading into this space makes sense. i'm not one of them. we have seen their expansion of influence to the takeover of the ftse by the director, now we see them wanting to move into the health care space. it is a problem we need to

address, i just do not necessarily think it is the purview of this committee to deal with that. if you listened to senator warnock, every solution he had dealt with committee subject matter outside of our jurisdiction. senator toomey mentioned a few statistics, i want to make sure i am right and see if there are other indicators. less than 1% medical debt is in collections, is that right? >> i'm not sure what percent of medical debt -- sen. tillis: i think it is around 0.93% of household debt. one number i'm curious about his medical debt is reduced substantially, 40% since 2009. you would think some of that attracts with the implementation of the affordable care act and expansion of medicaid. are there other things that could have contributed to the

production in medical debt over that time? dr. ippolito: broadly speaking, i'm sure the improving economy from 201010 to now has to have improved what we are seeing their and other outcomes on credit reports. sen. tillis: professor hyman, when you were talking about if this credit reporting is no longer taken into account as a predictive indicator, i think he said something to that effect that they would respond -- lenders would have to respond to that risk. give me some examples of unintended consequences. prof. hyman: it is hard to make predictions about the future. as i indicated in my written testimony, i would expect some increase in credit scores to happen, but the question would be whether credit agencies would make adjustments.

sen. tillis: setting the bar for what may or may not be good -- prof. hyman: modify the formula to come up with numbers that match the ability to repay for moving the bar for a good risk versus a bad risk. i would point out that there are potential consequences in the health care system. health care providers may become less willing to take patients that are unable to pay in full at the time of service and i would expect increased consolidation because larger providers are better able to weather the storm than an individual practice. sen. tillis: what other potential unintended consequences can come from addressing the underlying problems you mentioned? prof. hyman: i apologize for not

addressing that. the other problem, this is a feedback loop indicating the problems of the american health care system and it is no different from turning off the fire alarm. the fire is still going, you just no longer have the same evidence of the problem and he may not feel the same urgency to put the fire out. sen. tillis: ms. haynes, i was curious, you mentioned that a black and hispanic community is disproportionately hit by this. you also mentioned they are likely to be contacted twice as likely as a white person who may be a medical debt. have you looked at it along socioeconomic lines? is there much disparity, for example, between black, hispanic, and white poor family? you understand the question?

ms. haynes: [inaudible] but the data shows that in zip codes that are predominantly black, no matter income, they are more likely to be contacted by debt collectors than what zip codes. the data does show that across incomes, black folks are more likely to be contacted. sen. tillis: thank you. chair brown: thank you. i will ask my questions now. i was like with ms. king. in may 2020, he first received -- you first received your alarmingly high bail -- bill. october 2020, the nursing home so due for $80,000. -- sued you for $80,000. what impacted this have on your life? did you imagine you would ever be free of this? ms. king: in that amount, i could not.

it was more than i can take in at that time. i was grieving, my mom had just passed, and i was just trying to figure it out. how could they do this? i said i would not be responsible. how am i getting sued? i had no idea how i would handle that, how i would take care of paying that amount. what were they going to do to me? i had no idea. it was unbelievable. i felt terrible. it was ridiculously tough. chair brown: fortunately, you found legal services. ms. king: i found legal services and they helped me. chair brown: cleveland has a particularly good legal services. ms. king: very much so, they are amazing. chair brown: thank you.

mr. wirt, medical debt does not mean someone is a credit risk, it means they got sick. all five of our witnesses pointed out, sicknesses can happen to anyone, yet people with medical debt are harassed and made to feel like a burden to society. medical debt is not the fault of the person who gets sick. would you say our financial system treats medical debt like a moral failing? ms. stewart: yes, it treated as an individual moral failing when it is a feeling of the financial system, as we discussed during the hearing. the health care system is not regulated in terms of health care cost and people are bearing the brunt of rising costs, forced to pay higher deductibles, higher coinsurance, and the financial system does not take any of that into account, which is why we are grateful that you are holding

hearings like this to have conversations about systemic reforms that need to take place in the financial systems sector and health systems sector. chair brown: thank you. my last question, ms. haynes, equifax and trans union took an important step to wipe 70% of medical debt off credit reports. these changes will help the financial lives of millions. that means 30% is left. you have set in the past that medical debt is not predictive of credit risk. since medical debt is not a good indicator, should medical debt even be part of a credit report? should all medical debt be prohibited from being reported? ms. haynes: yes. as i suggested in my recommendations, ideally we should end the practice of turning over any debt to debt collectors considering how involuntary and unpredictable data from medical emergencies tends to be. i should add that the credit

bureaus and the change they made, while it is wonderful, there's a couple of categories of medical debt that will be removed. a lot will still remain on people's credit reports. debts of less than $500 will be removed. debt that has been paid off. that will help 15% of americans but if you look at the stats, the average medical debt americans having collections is $797. $854 for nonwhite communities. those individuals will still be left on the hook. chair brown: thank you. with these changes to how medical debt is reported, it is with considering what steps the cfpb and others might take to lighten the medical debt burden. senator awsat is from georgia, is recognized from his office. >> i want to extend a warm

welcome to you, ms. haynes. thank you for joining us and representing the state of georgia. i would like to begin with you and ask you, based upon your knowledge, then i'm going to turn to professor hyman with us in question. how does the american experience of incurring massive debt because of a medical emergency, because your family member needs a medical procedure, how does that compare with the experience of hopes -- of folks in other wealthy countries around the world? ms. haynes: as i noted in my testimony, in terms of the recommendations, enacting a publicly funded universal, single player pan -- single-payer plan will go along way. in various countries outside the united states, they have some version of a public option, a

public payer system. i will not speak to that anymore detail because i would have to get back to you about how that would actually look, but medical debt in this country is a uniquely american problem and we need to address it as it stands currently. sen. ossoff: professor hyman, whether you have undertaken a formal comparative analysis with other countries, what is your reaction to the same question? how the american experience contrasts with the experience of other folks in other advanced countries? prof. hyman: thank you for the question. that has not been the primary focus of my research, but my sense based on having done this for quite a while is the united states is an outlier, to say the least, relative to other countries in the cost of its health care system, which has predictable consequences for medical debt.

other countries vary in their delivery systems as well as their financing, but the united states is an outlier. sen. ossoff: thank you. i spoke with a fellow georgia named felicia who took care of her father after he suffered a stroke, the family faced steep medical bills. the impact of that debt has lowered her credit score and impose a burden on the family as a result, she was unable to take out a loan that was necessary for home repairs. this is not an uncommon story. folks don't choose to incur medical expenses for the most part, correct? ms. haynes: that is correct. medical debt tends to be unpredictable and involuntary and forces people to drive up there credit on credit cards, taking out personal loans.

medical debt can build people into a financial tailspin. sen. ossoff: as a fellow georgian, you are familiar with the saga of the state of georgia's refusal to expand medicaid under the affordable care act, one of 12 states that has made that decision. 80% of medical debt is held by households with zero or negative net worth. how could medicaid expansion in georgia, which senator warnock and i have fought for, we delivered resources to make it a better deal for the state of georgia, georgians are already paying federal taxes at the same level as folks in other states but not getting this investment in public health, forcing though income and middle income georgians into the emergency room instead a preventative health care, in your opinion, what would be the impact of medicaid expansion in georgia on

the burden of medical debt that is faced by many of our fellow georgian? ms. haynes: thank you for that questions. georgia has one of the highest uninsured rates in the country. it impacts like an latinx families. expanding medicaid would not only help in terms of the hospital closures we have seen that are connected to the lack of medicaid expansion, but it would help reduce the medical debt crisis facing many black and latinx georgian families, by making sure they are not lost in the coverage gap. sen. ossoff: thank you. ms. stewart, as has been discussed, ever faxed to my trans union announced changes to the way they score medical debt. as i understand it, medical collection debt under $500 will not appear on consumer credit reports. the average amount of medical

debt, according to my staff's research, is $2400 for those who are carrying it. how will the credit reporting agencies announcement of this change impact individuals who have more than $500 of medical debt? ms. stewart: thank you, senator. for people who have debt more than $500, they will have an extra year to resolve the debt, so that is the good news. beyond that, people with that over $500, it would not be removed from the credit report and that is something we would encourage cfpb to pursue and explore. sen. ossoff: thank you all for your well-informed and concise questions and thank you for holding this hearing. i will close with this note. it is a travesty that millions of americans suffer not just from illness that they are unable to treat or prevent in

the way that most of us would expect because they cannot get health insurance, but then the burden of debt, these moments of crisis for their families, we have widespread medical debt, we have children with school lunch debt, we have to stop burdening working people across the united states with debt for the necessaries of life like food and health care. thank you, mr. chairman, for convening this meeting. chair brown: thank you. senator cortez masto is recognized. >> thank you for holding this hearing and thank you it is a for joining us. one issue i want to raise is the issue of medical debt in indian country. for generations, the federal government had a trust entreaty responsibility to provide care to tribal nations but the volume of medical debt across tribal human is evidence that we have fallen short of meeting those

obligations. in 2019, the new york times report found indian health service's declined to pay medical bills for more than 500,000 patients, saddling them with more than $2 billion in medical debt over three years. how will these changes in reporting affect native americans? i will start with ms. haynes. ms. haynes: i cannot speak to that particular issue but if we are talking about federally held that, you may be aware of the changes related to federally held medical debt recently that may go a long way towards helping consumers avoid some of the credit downfall of medical debt. sen. cortez masto: ms. stewart? ms. stewart: i would agree with ms. haynes. and to highlight that one of the

issues with respect to medical debt and its impact on native americans is a lack of data and is something that community catalyst is focused on making sure there is more investment in disaggregated data so there is more 30 on the impact on native american populations. sen. cortez masto: this is one area that there is a lack of data. we are missing out on important services. we really have to start focusing on those that are being left behind. let me jump to another area, lack of communication in this important information that is not at times. in a recent report, it was eliminating because it said 50% of black respondents did not know that hospitals provide free and reduced cost care for low income patients. do we know what the level of awareness of these programs is

among spanish-speaking and other non-english-speaking communities ? this is a travesty. let me ask maybe ms. king or ms. stewart or ms. hayes -- ms. haynes. i am concerned that the information is not getting out there. we have a report showing that members of our black committee are not getting it. what about those who have a linkage barrier? how are we making sure they have access to this information? >> i will start. first of all, there are no requirements that hospitals including nonprofit hospitals proactively screen people for financial assistance. there are responsibilities to make information available but for many people, they report that they had no awareness that they were eligible for financial assistance.

for people who english is not their primary language, that is a critical issue and you can imagine how that issue is expounded when somebody has a leg which barrier. it is concerning, especially for people who face language barriers. sen. cortez masto: what should we be doing about it? what can congress do to make sure this information gets out there? ms. stewart: there could be changes to the nonprofit community benefit standards to require hospitals to prescreen people for financial assistance programs prior to billing them. there could be financial support for consumer assistance programs and other community-based organizations who could be available with resources to offer that assistance. sen. cortez masto: thank you. yes, please. >> i would add that the affordable care act included requirements for nonprofit community hospitals to develop a plan and report on the plan, but

it did not include parallel requirements to disclose to patients along with the other things that they do disclose to patients, we have a charity care program and here are the details and how you should apply. you could do that with legislation or regulation. as a condition of participation. sen. cortez masto: thank you. ms. haynes: i wanted to add to those comments as well. in addition to improving the requirement to screen patients before billing, there is no action patients have under the affordable care act to enforce the requirement. allowing patients to enforce state and federal fap laws in court to hold violating hospitals liable would go a long way towards improving this. sen. cortez masto: thank you. chair brown: take the five of you for being here. as senator toomey's charge

pointed out on the affordable care act, medicare expansion not only improves the health of americans it has also improved financial health as well. states have expanded medicaid programs. we know georgia is an exception, but states that expanded medicaid programs sought medical debt fall by 40%, almost in have. i would add parenthetically, the implementation of the child tax credit dropped the poverty rate by about that number for america's children. medicaid expansion helped reduced medical debt. much more needs to be done. i look forward to working with colleagues to reduce medical debt, including by creating a miracle -- medical debt -- so that americans are able to focus on their health. to highlight the need for congressional action i would submit for the records three

testimonials from mindy of ohio, penelope of senator tillis's state and someone from senator toomey's state. thanks to the witnesses who wish to submit questions. these questions are due one week from today. to the five witnesses, if you get questions admitted please submit your response for the record within 45 days of the day that you receive them. the hearing is adjourned. [indiscernible chatter] [laughter]

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