Senator Bernie Sanders (I-VT) has introduced his plan to eliminate $81 billion in medical debt as part of his pitch to become the Democratic presidential candidate. The plan would erase debt that has been sent to collection agencies and help Americans who face unpaid medical debt when it comes to credit reporting.
The plan comes at a time when 1 in 4 Americans has an unpaid medical bill. Another 79 million Americans are struggling to pay medical debt, according to Sanders, and 8 million people were pushed into poverty due to medical expenses. In addition, 66.5% of all bankruptcies are connected to medical issues, Sanders noted in his announcement.
“[Seventy-nine] million Americans are burdened by medical debt for the ‘crime’ of getting sick. We’re going to eliminate all past-due medical debt,” Sanders tweeted Monday.
Sanders’ plan would tackle $81 billion of medical debt by the federal government negotiating and paying off past-due medical bills in collections that have been reported to credit agencies. Medical debt is the most reported type of debt, affecting 46 million Americans who have had at least one unpaid medical bill sent to a collection agency on their credit report.
The plan also aims to eliminate “harassing debt collection practices,” prohibit the collection of debt beyond the statute of limitations; limit contact attempts per week by a collector to an individual; require collectors to ensure information about a debt is fully accurate before attempting to collect; and limit the assets that can be seized and wages that can be garnished in collections.
Finally, the plan calls for the IRS to review the billing and collection practices of roughly 3,000 nonprofit hospitals to ensure they are following through on charitable care standards. News reports about some nonprofit hospitals aggressively suing their poor patients to collect small medical debts have recently come to light, and California-based Kaiser Permanente is facing pressure from its workforce to promote charitable care by treating a higher proportion of Medicaid patients.
In addition, Sanders promised to update the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which he called “a disastrous piece of legislation that benefited Wall Street and the credit card companies.”
Along with changing that law and using the existing bankruptcy court system to provide relief for those with medical debt, Sanders wants to create a public credit registry that would replace the main three, for-profit private credit reporting agencies and remove and exclude medical debt from existing credit reports.