CFPB Proposes Prohibiting Inclusion of Medical Debt on Consumer’s Credit Reports
On August 10, 2023, CCLP celebrated our 25th anniversary, bringing friends new and old to the Carriage House at the Governor's Residence.
Katie Wallat, CCLP’s Senior Attorney, provided testimony at the August 11, 2023, meeting of the Medical Services Board.
HB23-1126 provides first-in-the-nation protections for Coloradans with medical debt.
Making health care inaccessible again
On Monday, House Republicans released their long-anticipated ACA repeal-and-replace bill. Though the title is the American Health Care Act, a better name might have been “Repeal Access to Care.”
Among other measures, this bill would make insurance unaffordable for 450,000 low-income Coloradans by reducing the federal match for the Medicaid expansion after 2020 from 90 percent to 50 percent.
The legislation would eliminate cost-sharing assistance for individuals and families with private insurance who make less than 250 percent of the Federal Poverty Level. It would reduce premium tax credits, designed to make health insurance affordable for people with more middle class incomes. Additionally, the bill would make it harder for low- and moderate-income people to get and keep insurance coverage. Furthermore, it would repeal taxes on the wealthy by reinstating tax exemptions for insurance companies that pay their directors, officers and employees more than $500,000 a year and Medicare taxes for people making over $250,000 a year.
But wait, there’s more!
In addition to making it impossible for TABOR-restricted Colorado to retain the Medicaid expansion after 2020 without gutting funding for education and other expenditures, the bill would make the Medicaid program less accessible to low-income people by reducing children’s eligibility from 133 percent of the Federal Poverty Level to 100 percent FPL. It would eliminate an important pre-ACA Medicaid protection that allows people to get help with medical bills incurred up to three months before they applied for Medicaid. Another core ACA provision, the Medicaid three-month “look-back,” made sure that very low-income people who were uninsured were able to get help with medical bills rather than forgo care and/or fall into bankruptcy.
Most significantly over the long-term, the bill would change the core structure of Medicaid financing by instituting a per-capita cap for program expenditures. The per-capita cap, which would begin in Federal Fiscal Year 2020, would be allocated to states according to a formula based on 2016 expenditures in four Medicaid eligibility categories: aged blind and disabled, children, non-expansion adults and expansion adults.
Not only would the base funding year be four years out of date by 2020, but states that over-expend their allocation after that would have to pay back any over-expenditure through a reduction in their allotment the following year –thus whittling away the amount of money available to states. While the growth rate in the per capita allocation will be tied to a medical inflation rate, states would inevitably face multiple unexpected circumstances that drive health care expenses, including the availability of expensive new medical technologies and pharmaceuticals (think Hepatitis C treatments) as well as natural disasters and recessions. The per-capita cap is at the core of the federal effort to reduce federal expenditures and shift program costs to the states. In the end, Medicaid will be a very different program under this financing structure, and Colorado would face impossible financing decisions related to care for its most vulnerable citizens, including seniors and the disabled.
With respect to private insurance, the bill includes advanceable, refundable tax credits, but reduces the amount available to families and individuals compared to current ACA premium tax credits. Young people, under age 30 would be eligible for $2,000 a year to help them purchase insurance; older people over age 60-65 would be eligible for $4,000. The credits would be stackable within a family up to a maximum of $14,000. The average cost of employer-based family coverage in Colorado was $16,940 in 2015 with the employee paying almost $5,000 of that. Individual plans range in price, but a typical quote for insurance for a four-person family in Denver is about $1,260 a month ($15,120 per year) for a mid-level silver plan and $1,877 a month ($22,525 per year) in Summit County.
The bill phases out tax credits when on annual incomes reach $75,000 for an individual and $150,000 for a married couple. Also, there is no acknowledgement that families that are struggling to make ends meet are in a very different position with respect to how much help they need in order to afford health insurance than those making six figures, or the skimpier the insurance policy, the more the policy-holder is exposed to high out-of-pocket costs.
Finally, the bill attempts to address shortfalls by expanding access to Health Savings Accounts (HSAs). But HSAs are tax shelters that help families that are middle-income and above. CCLP’s Self Sufficiency Standard demonstrates that low and moderate income families require income of as much as 300 percent of the Federal Poverty Level just to make ends meet without support, and are not in a position to put money away in a restricted savings account.
While there is a lot more to the bill outlined in our fact sheet, this poorly conceived legislation would substantially reduce the number of insured Coloradans and make it far more difficult for low- and moderate-income families to afford care. If approved into law, the burdens will be felt by the most vulnerable and the benefits by the least.
Committee markup on the American Health Care Act is on March 8, at 10 a.m. EST. Please take action by calling your member of Congress now.
– Elisabeth Arenales