California bill aims to eliminate medical debt for certain patients

A new bill introduced in the Legislature is designed to erase crushing medical debt for Californians.

Assembly Bill 2123, introduced by California Assembly Majority Leader Cecilia Aguiar-Curry, D-Davis, would establish a medical debt relief program to be paid for by $2.5 million of general fund revenues, according to a legislative analysis.

“When this debt goes to collections, it can damage credit for years, making it hard to secure housing, employment and loans,” Aguiar-Curry testified during a Tuesday bill hearing in the Assembly Health Committee. “As a result, many Californians go without necessary care or struggle with basic resources.”

There was no testimony in opposition to Aguiar-Curry’s bill on Tuesday, and no groups or individuals have opposed the bill so far this year, according to the legislative analysis.

Aguiar-Curry’s bill stipulates that the California Health Facilities Financing Authority, which would oversee the medical debt relief program, would contract with a debt relief coordinator to acquire the medical debt of certain patients. The bill would also prohibit a patient’s discharged medical debt to be included as taxable income for the state income tax, according to the legislative analysis of the bill.

To qualify for the debt relief program, Californians would have to have a federal gross adjusted income of 400% of the federal poverty line or less, or have medical debt that is more than 5% of their adjusted gross income based on their most recent tax return.

According to the bill analysis, four in 10 Californians have medical debt. Approximately 55% of Californians with low incomes and 37% with high incomes carry debt related to unaffordable medical expenses, with Hispanic patients reporting more medical debt than their white, Asian or Black counterparts.

“I previously got sick when I was in college, and had it not been for the Affordable Care Act and having been covered under the ACA, I would be hundreds of thousands of dollars in medical debt,” Assemblymember Jessica Caloza, D-Los Angeles, said during the committee meeting following Aguiar-Curry’s testimony. “So this is completely an affordability issue for millions of Californians right now who may be under crushing medical debt.”

According to a report from University of California, Berkeley’s Labor Center, 45% of people with medical debt acquired it at both a hospital and doctor’s or dentist’s office. Approximately 28% acquired medical debt at a hospital, 21% acquired it at a doctor’s or dentist’s office and 6% acquired medical debt other types of medical providers or suppliers or did not report how they went into medical debt.

Another bill introduced this year, Assembly Bill 2746, would count credit card debt accrued to pay for medical expenses as medical debt. That bill, introduced by Assemblymember Pilar Schiavo, D-Santa Clarita, was re-referred this week to the Assembly Committee on Health and the Assembly Committee on Business and Finance for bill hearings in both committees.

The committee had not voted on the bill as of press time on Tuesday.