Домой United States USA — Financial Workers’ wages siphoned to pay medical bills, despite consumer protections

Workers’ wages siphoned to pay medical bills, despite consumer protections

79
0
ПОДЕЛИТЬСЯ

Forty-five states allow wage garnishment for unpaid medical bills.
Stacey Knoll thought the court summons she received was a scam. She didn’t remember getting any medical bills from Montrose Regional Health, a nonprofit hospital, after a 2020 emergency room visit.
So she was shocked when, three years after the trip to the hospital, her employer received court orders requiring it to start funneling a chunk of her paychecks to a debt collector for an unpaid $881 medical bill — which had grown to $1,155.26 from interest and court fees.
The timing was terrible. After leaving a bad marriage and staying in a shelter, she had just gotten full custody of her three children, steady housing in Montrose, Colorado, and a job at a gas station.
“And that’s when I got that garnishment from the court,” she said. “It was really scary. I’d never been on my own or raised kids on my own.”
Among the other findings:
Patients were pursued for medical bills ranging from under $30 to over $30,000, with most of the bills amounting to less than $2,400. As the cases rolled through the legal system, accumulating interest and court fees, the amount that patients owed often grew by 25%. In one case, it snowballed by more than 400%.
Cases trailed people for up to 14 years after they received medical care, with debt collectors reviving their cases even as they moved from job to job.
Medical providers of all stripes are behind these bills — big health care chains, small rural hospitals, physician groups, public ambulance services, and more. In several cases, hospitals won permission to take the pay of their own employees who had unpaid bills from treatment at the facilities.
Colorado has company. It is one of 45 states that allow wage garnishment for unpaid medical bills. Only Delaware, New York, North Carolina, Pennsylvania, and Texas have banned wage garnishment for medical debt.
As KFF Health News has reported, medical debt is devastating for millions of people across the country. And now the problem is likely to grow more pressing nationwide. Millions of Americans are expected to lose health insurance in the coming years due to Medicaid changes in President Donald Trump’s tax and spending law and if Congress allows some Affordable Care Act subsidies to expire. That means health crises for the newly uninsured could lead them, too, into a spiral of medical debt.
And the hurt will linger: Large unpaid medical bills are staying on credit reports in most states after a July decision from a federal judge reversed a new rule aimed at protecting consumers.
“If you can’t maintain your health, how are you going to work to pay back a debt?” said Adam Fox, deputy director of the Colorado Consumer Health Initiative, a nonprofit aimed at lowering health costs. “And if you fundamentally can’t pay the bill, wage garnishment isn’t going to help you do that. It’s going to put you in more financial distress.”Flying blind on medical debt
When someone fails to pay a bill, the creditor that provided the service — whether for a garage door repair, a car loan, or medical care — can take the debtor to court. Creditors can also pass the debt to a debt collector or debt buyer, who can do the same.
“At any given point, about 1% of working adults are being garnished for some reason,” said Anthony DeFusco, an economist at the University of Wisconsin-Madison, who studied paycheck data from ADP, a payroll processor that distributes paychecks to about a fifth of private sector U.S. workers. “That’s a big chunk of the population.”
But specific research into the practice of garnishing wages over medical debt is scant. Studies in North Carolina, Virginia, and New York have found that nonprofit hospitals commonly garnish wages from indebted patients, with some studies finding those patients tend to work in low-wage occupations.
Marty Makary, who led research on medical debt wage garnishment in Virginia at Johns Hopkins University before joining Trump’s cabinet as Food and Drug Administration commissioner, has called the practice “aggressive.” He co-authored a study that found 36% of Virginia hospitals, mostly nonprofit and mostly in urban areas, were using garnishment to collect unpaid debts in 2017, affecting thousands of patients.
The Colorado findings from KFF Health News show that hospitals are far from the only medical providers going after patients’ paychecks, though.
Researchers and advocates say that, in addition to a dearth of court case data, another phenomenon tends to obscure how often this happens. “People find debt shameful,” said Lester Bird, a senior manager at the Pew Charitable Trusts who specializes in courts. “A lot of this exists in the shadows.”
Without data on how often this tactic is employed, lawmakers are flying blind — even as a 2024 Associated Press-NORC poll showed about 4 in 5 U.S. adults believe it’s important for the federal government to provide medical debt relief.‘Blood from a turnip’
Colorado was among the first of 15 states to scratch medical debt from credit reports. Debt buyers in the state aren’t allowed to foreclose on a patient’s home. If qualified patients opt to pay in monthly installments, those payments shouldn’t exceed 6% of their household income — and the remaining debt gets wiped after about three years of paying.
But if they don’t agree to a payment plan, Coloradans can have up to 20% of their disposable earnings garnished. The National Consumer Law Center gave the state a “D” grade for state protections of family finances.
Consumer advocates said they aren’t sure how well even those Colorado requirements are being followed. And people wrote letters to the courts saying wage garnishment would exacerbate their already dire financial situations.
“I have begun to fall behind on my electricity, my gas, my water my credit cards,” wrote a man in western Colorado in a letter to a judge that KFF Health News obtained in the court filings.

Continue reading...