Advocates applaud passage of Louisa Carman Medical Debt Relief Act

TRENTON: Advocates, policy experts, and labor today applauded Assemblywoman Verlina Reynolds-Jackson, Senator Shirley Turner, sponsors and the Assembly Financial Institutions and Insurance Committee and staff for their work to advance the Louisa Carman Medical Debt Relief Act proposed by Governor Murphy.  

The Act protects New Jerseyans from many of the financial harms associated with medical debt by 

  • Banning most medical debt from being reported to credit reporting agencies 
  • Imposing a 3% cap on the interest rate on all medical debt. 
  • Creating public notification requirements and parameters for provider payment plans. 
  • Prohibiting wages from being garnished for medical debt for patients below 600% of the Federal Poverty Level. 
  • Making reported medical debt, with exception of medical credit card debt, void as a penalty to the reporting entity and relieving the person of the obligation to pay it.  

These protections are critical for the 1.5 million New Jersey residents struggling with medical debt, 22% of whom are in collections. The crisis also highlights longstanding racial and socio-economic inequities; 33% of New Jersey residents with medical debt who are in collections are part of communities of color, compared with 16% of residents in collections in white communities. 

"There are significant benefits in this Act, and we are committed to working towards ensuring consumers have all the financial protection from medical debt they need and to ensure the public is made aware of their rights under this law," said Laura Waddell, New Jersey Citizen Action’s Health Care Program Director 

"This bill goes a long way to protect blood cancer patients in New Jersey from the worst medical debt collection practices," said Ernie Davis, Senior Director-Northeast Govt. Affairs of Leukemia and Lymphoma Society. 

Beverly Brown Ruggia, New Jersey Citizen Action’s Financial Justice Program Director said, "We look forward to supporting the Office of the Attorney General in its efforts to enforce the law. We also call on the Legislature to restore the right of consumers to seek a legal remedy any inappropriate reporting, which was deemed appropriate under the Fair Credit Reporting Act under which this bill is now codified." 

Renee Steinhagen, Executive Director of NJ Appleseed said, “In addition to protecting consumers from credit reporting of their unpaid medical bills, this bill also requires providers to offer patients a reasonable payment plan that is capped at 3% of their monthly income and can be spread out up to 5 years.  If this requirement is properly and fairly implemented by providers and consumers are aware of this option, we may be able to effectively keep medical debt out of the collection process entirely, or at a minimum reduce the number of cases that go to collections and end up in court.” 

“Medical debt is a serious problem, pushing families into bankruptcy and making it harder to get the health care they need,” saidBrittany Holom-Trundy, Ph.D., Senior Policy Analyst at New Jersey Policy Perspective (NJPP). “This bill addresses some of the most predatory aspects of medical debt by capping interest payments, banning medical debt from showing up on credit reports, and stopping wage garnishment for people with low incomes. These changes mean that people will no longer have their lives turned upside down because of their medical bills, and they set a strong foundation for more consumer protections in the future.” 

“For many years we have seen medical debt destroy the credit rating of patients who have been unfortunate enough to develop serious illness. Today, New Jersey has taken some positive steps in addressing this issue by passing the Louisa Carman Medical Debt Relief Act, but we must also continue to advocate for stronger state and federal safeguards to protect our patients in this area."  said Debbie White, RN, HPAE President. 

“The state legislature has taken a meaningful step in alleviating the burden of medical debt on New Jerseyans. Recent surveys of cancer patients and survivors have found that patients with medical debt avoid essential care in order to avoid accumulating more medical debt, which in some cases may lead to devastating health outcomes. With his signature on the Louisa Carman Medical Debt Relief Act, Governor Murphy has the chance to ease the burden of medical debt on New Jerseyans,” said Quinton Law, Government Relations Director for the American Cancer Society Cancer Action Network (ACS CAN) in New Jersey. “Cancer patients and survivors across New Jersey are eager to build on this progress and work with lawmakers to pursue additional policy solutions to prevent patients from incurring medical debt. The Louisa Carman Medical Debt Relief Act is just the start of our state’s journey to sever the link between illness and financial hardship.”