BILL NUMBER: S1857
SPONSOR: RIVERA
 
TITLE OF BILL:
An act to amend the public health law and the tax law, in relation to
establishing a pilot hospital medical debt relief program
 
PURPOSE:
Establishes a pilot hospital medical debt relief program.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 provides the short title known as the "Hospital Medical Debt
Relief Act."
Section 2 amends Article 2 of the Public Health Law (PHL) by adding a
new title 2-G to be known as the Hospital Medical Debt Relief Program,
to create a 3-year pilot program requiring the Commissioner of Health
(COH) to contract with a non-profit organization to cancel hospital
medical debt owed by New York State (NYS) residents.
Section 245 of PHL defines "Eligible Resident" as a NYS resident with
household income at or below 400% FPL or with medical debt at or above
5% of household income and defines "General Hospital Medical Debt" as an
obligated amount a person owes for healthcare services, products, or
devices a person received by a general hospital or by a provider within
the hospital.
Section 246 of PHL sets guidelines for the program that includes agree-
ments with hospitals in NY to identify residents with various patient
data and other information for eligibility, and retire debt for any
eligible resident with a priority for those with medical debt 18 months
or older by purchasing the debt below fair market value or receive the
debt as a donation from a participating hospital. This section also
requires hospitals to notify patients about data sharing while also
requiring the non-profit organization to notify eligible residents of
their intent to acquire their debt and provide notice about debt cancel-
lation. The non-profit shall also report annually on the program's
progress which shall include the amount of debt purchased and
discharged, the number of eligible residents who received relief, and
other demographics.
Section 3 amends subsection (i) of section 601 of the tax law by relet-
tering subsection U) and adding a new subsection (i) as it relates to
hospital medical debt relief. In accordance with this section, income
received in the form of debt cancellation shall be exempt from taxes.
Section 4 provides the effective date.
 
JUSTIFICATION:
Medical debt is an obscene source of stress for thousands of New Yorkers
and has been called the most common cause of bankruptcy in the United
States. In New York State, medical debt has caused financial hardship
for too many families, causing many to be put into collections, to use
up all of their savings, or to choose between basic necessities like
food or housing and resolving their debt. In the final report of the
Discharged into Debt series, issued by the Community Service Society
(CSS), a 2022 survey found that 5% of New Yorkers say they are not
confident that they can afford routine healthcare and 70% say they
aren't confident that they can afford the cost related to major illness.
Medical debt is even a concern to those with health insurance who find
the rising deductibles and out-of-pocket costs difficult to afford. Many
people who participated in the study reported they or a family member
avoided medical care, such as not filling prescriptions and skipping
tests or treatments, because they were afraid of the bills.
Communities of color and low-income communities are the most impacted by
medical debt. In the past, hospitals have taken extreme measures to
collect debt from patients including reporting patients to collection
agencies, filing lawsuits, placing property liens, and garnishing their
wages. Between 2015 and 2020 there were over 50,000 medical debt cases
filed against patients, and over 4,000 liens were placed on homes in
2017. Hospitals already received millions of dollars of state funding,
the Indigent Care Pool, which is intended to compensate for patients who
are unable to pay, and yet they are still taking extreme measures
against those who cannot afford it. Over the last few years, multiple
laws were passed regulating medical debt, limiting surprise fees from
hospitals, and forbidding liens on primary residences and wage garnish-
ment to collect, but more must be done to help New Yorkers who are still
burdened by this crisis.
Nobody wants to or plans to be sick. Necessary care should not cause
undue financial burden. Medical debt is obscene when healthcare should
be guaranteed and affordable. By enacting the Medical Debt Relief Act,
not-for-profit organizations will be contracted to purchase the debt of
eligible New York residents and cancel the money they owe, helping to
keep residents out of debt while resolving payments to hospitals.
This legislation was inspired by the work of an organization named RIP
Medical Debt, which uses donations from the public and has contracted
with other governments around the U.S. to purchase medical debt at a
steep discount and abolish medical debt permanently.
 
LEGISLATIVE HISTORY:
2023-2024: S5909-B/A6096-B Reyes
 
FISCAL IMPLICATIONS:
Subject to appropriations.
 
EFFECTIVE DATE:
This act shall take effect 180 days after it becomes law.