Proposed Legislation Seeks to Keep More Vermonters Out of Medical Debt 

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• Jeb Wallace-Brodeur
• Mary-Jane Boyce

As a case manager at a life insurance company, Mary-Jane Boyce has what she considers a good health plan. So when a bad case of the flu landed her in the emergency room at the Central Vermont Medical Center in Berlin several years ago, she couldn't believe the price tag: $3,000, after insurance kicked in.

"All I could think about was, How am I going to pay this off?" said Boyce, 56, of Montpelier. "I don't have $3,000. I don't even have $1,000."

The payment plan offered by a debt collection agency allowed Boyce to pay in monthly installments, but even those proved too much at times. She couldn't always afford her asthma medications, one of which cost about $300 a month after insurance, and had to stop helping her daughter pay off student loans. Some weeks, she subsisted mainly on donations from the food shelf.

Boyce finally paid off her ER bill but found herself back in debt again last year after her insurance refused to cover a costly dental procedure. Forced to pay up front, Boyce said she had "no choice" but to take out a $2,600 loan from a local bank. She now expects to be free of her medical debt within two years — so long as she stays healthy.

Boyce's experience is common in the United States, where collection agencies held $140 billion in unpaid medical bills last year, according to a recent study published in the Journal of the American Medical Association. Nearly one in five Americans has had unpaid medical bills turned over to a collection agency within the last decade, and medical debt now represents the leading cause of personal bankruptcy.

No one knows how many Vermonters carry medical debt, but the number is likely high. State hospitals reported some $85 million in unpaid bills in 2019. That didn't include bills paid off with credit cards or those on long-term payment plans. Nor did it reflect debts owed to other medical providers.

Vermont Legal Aid began soliciting stories about medical debt last year to help policy makers better understand the prevalence and human cost of unpaid bills. More than 500 people from across the state, including Boyce, offered their experiences.

Vermonters who responded were mainly insured, including a large number of older people on Medicare plans. Many said they regularly defer or avoid necessary medical care, even when it's recommended by their doctors, out of fear of incurring another bill they can't afford.

"We clearly touched a nerve," said Mike Fisher, Vermont's chief health care advocate, a state-funded position at Legal Aid. "Almost everybody that I talk to says, 'Yeah, I've got a friend...' or 'I've got a brother...' or 'I know somebody who's really being hurt.' It's prevalent."

Fisher recently shared the project's findings with lawmakers and is urging them to consider legislation that would do more to prevent low-income patients from falling into insurmountable debt. Doing so, Fisher said, would help Vermont meet one of its main health reform goals: getting people the "right care at the right time."

"Vermonters want to pay their bills. They want to make good on them," Fisher said. "In desperation, all they know how to do is not go to the doctor again."

The number of uninsured Americans has plummeted since the passage of the Affordable Care Act. But plans with high deductibles have become common, and insured people who suffer medical emergencies routinely end up paying hundreds or thousands of dollars in out-of-pocket costs.

Hospitals have two options when patients don't pay their medical bills. They can either forgive the debt or refer it to a collection agency knowing that, at best, they'll recoup a percentage of the full amount. Vermont hospitals forgave about $45 million in unpaid bills in 2019, nearly half of what they reported in bad debt.

As nonprofits, Vermont's 14 hospitals are obligated to provide discounts and charity care for low-income patients, as well as budget a certain amount of money each year for that purpose. But they aren't required to screen people to see whether they qualify. There are also no federal standards for what free-care policies should look like, so each hospital sets its own rules, leading to wide disparities.

For example, patients can apply to have their bills completely forgiven at Springfield Hospital if their household income is below 100 percent of the federal poverty guidelines — about $26,500 for a family of four. That same household could take home $53,000 and still have bills forgiven at the University of Vermont Medical Center, and it could make up to $79,500 to qualify at Copley Hospital in Morrisville.

Income caps aren't the only differences. Whereas some policies, including UVM Medical Center's, allow anyone who lived in Vermont at the time of their care to apply, others require patients to live within a certain distance of the hospital.

Fisher recalled a Vermont truck driver who suffered a medical emergency while working. The hospital that treated him denied his request for financial assistance because he lived outside of its service area, Fisher said. The hospital reversed course only after Legal Aid got involved.

The legislation that Legal Aid is supporting at the Statehouse would prevent situations such as this by creating a uniform, statewide free-care policy that would guarantee patients could have debts forgiven no matter where they're treated, as long as they meet income requirements.

The bill, which has been introduced in both the House and Senate, would require hospitals to offer free care to households below certain income levels and would cap out-of-pocket charges at 20 percent of a patient's household income, regardless of how much money they make. It would also require hospitals to widely publicize their policies, offer them to every patient and have translations available upon request. "You can have the best policy in the world and not let anyone know about it," Fisher said.

Michael Del Trecco, senior vice president of finance and operations at the Vermont Association of Hospitals and Health Systems, said the trade organization was still working to determine whether the bill would create any "unintended" financial burdens for its members. But he sounded open to the idea, saying he found much of the proposal "generally favorable."

"We are always trying to get patients the access and financial assistance [they] need," he said. "Anytime there's an opportunity to help, that's part of our mission."

The proposal's chances to pass this session remain unclear. The House Health Care Committee reviewed the bill earlier this month and plans to take testimony in the coming weeks. Some Republican lawmakers have expressed concerns about how it might impact cash-strapped rural hospitals.

Fisher responded that the bill shouldn't have a major effect on hospital budgets. Patients who earn little enough to benefit from any expanded policies probably can't afford to pay their medical bills already, he said. And while hospitals continue to pursue their bad debts, they usually receive only "pennies on the dollar" of what they're owed. "But from a patient's perspective, it's a world of difference," he said.

Solving Vermont's medical debt problem will require a far more concentrated effort, especially as health care costs continue to rise. And there's only so much that Vermont lawmakers can do on their own, since some patients end up going out-of-state for their care.

Shauna Hill, a 44-year-old single mother from Burlington, racked up $15,000 in medical bills six years ago after a bump on her head turned out to be a rare form of blood cancer — one that ultimately required neurosurgery at Dartmouth-Hitchcock medical center in New Hampshire. She, too, recounted her experience for Legal Aid's storytelling project.

As a social worker, Hill made too much to qualify for most free care policies but not enough to be able to afford her bill, even after getting on a payment plan. Still, she had heard enough horror stories about aggressive collection agencies to know that she never wanted one to pursue her, so she scrambled to pay the costly bills.

Doing so meant that she had to rely on high-interest credit cards for other expenses, and she eventually realized that her debt was growing instead of shrinking. She's now on a payment plan with her credit union and estimates that she will have paid about $30,000 more than her initial medical bills once she's finished.

"The financial grip of my initial crisis is more limiting than the health issue itself by miles," she said. "The stress of managing month to month, year to year — Christmas, birthdays ... It controls my life. It's my main dragon to slay."