Billions of dollars of medical debt owed by nearly a million Los Angeles County residents could be purchased by the county and retired, according to a proposal set in motion on Tuesday, Oct. 3.
The L.A. County Board of Supervisors voted 5-0 to explore a plan to purchase $2.6 billion in medical bills owed by people throughout the county for pennies on the dollar. If implemented, the action would relieve families of what can become a lifetime burden and often prevents them from seeking medical care.
“Medical debt can contribute to food insecurity and housing instability,” said Fourth District Supervisor and board chair Janice Hahn, co-author of the motion along with Second District Supervisor Holly Mitchell. “Once someone has medical debt it becomes a barrier to assessing their healthcare.”
Hahn said the motion is a way to address medical debt experienced by up to a million county residents. The process would cost the county only a fraction of the amount owed to buy the debt, then retire it, the county reported.
Here’s how it would work:
When people accumulate debt from unpaid medical bills, eventually hospitals and medical establishments sell the debt to for-profit collection agencies. If not paid, these agencies often win judgments in court that can result in liens on payroll and properties against the patients.
Los Angeles County intends to intervene by buying out the residents’ debt for pennies on the dollar.
The proposal could wipe out billions of dollars in medical debt at a cost to the county of only millions, Hahn explained. The potential cost to the county would be $24 million to retire $2 billion in medical debt spread over the next two to three years, according to the county Department of Public Health (DPH).
To make this happen, the county is pursuing county, state, federal and philanthropic funding sources; a method for buying the medical debt; and is working with county departments, including DPH. Developing a plan for doing so was approved on Tuesday and it is scheduled to be presented to the board in about three months.
Some nonprofits in the past used their own funds to pay people’s medical debts. And buying medical debt on the cheap has been done in Cook County, Illinois and in Washington D.C., Hahn reported. “This has resulted in meaningful changes to residents’ health and lives,” Hahn said.
Support for the measure on Tuesday came from medical, legal aid and anti-poverty groups.
“Medical debt remains a public health emergency in Los Angeles County and serves as a consequential deterrent and social determinant when it comes to patients seeking appropriate and timely medical care,” wrote Dr. Jerry P. Abraham, president of the Los Angeles County Medical Association, in a comment letter to the board.
Abraham, who also testified before the board, said the members of the medical association “stand in solidarity” with the supervisors in support of the plan.
The Western Center on Law and Poverty, which provides legal services and support to those overwhelmed by medical debt, wrote a letter in support of the motion. The group has worked on the issue through legislation and has urged hospitals to provide “charity care,” but despite such efforts, medical debt has grown, burdening low- and middle-income California residents, the group wrote in its letter.
About 1 in 10 county residents — between 800,000 and 1 million people — carry medical debt, the group reported.
“Medical debt prevents people from seeking medical care and prescriptions and contributes to food and housing insecurity. These health and financial harms can be avoided and corrected with the right policies,” said the letter signed by Western Center on Law and Poverty’s executive director, Crystal Crawford, and senior attorney Helen Tran.
The group cited a case in which a collection agency in the county obtained a judgment against a patient for $213,352, for a bill that was originally $176,706. The group said the patient was unaware of the case and was eligible for a full discount under the state’s charity care laws. A lien was attached to the patient’s home.
According to a new study, medical debt in L.A. County disproportionately affects lower-income residents and Latino, Black, and Native or mixed-race communities, Hahn reported.
In addition to buying up the debt, the motion also requires all hospitals in the county to make public their policies for collecting unpaid bills, and it requires hospitals to provide financial assistance. This data would be posted online on the DPH’s website. The county would also work with hospitals to find the best ways to collect debt from patients and provide financial assistance.
The county’s DPH is given the task of finding ways that hospitals can reduce the accumulation of medical debt in the county and report back to the board in four months.