On top of his “Medicare for all” proposal, Mr. Sanders’s new plan would wipe out an estimated $81 billion in existing medical debt and ignore such debt in credit scores.
Bernie Sanders has long wanted to remake the health care system so no one will have to pay directly for medical care again. Now, he also wants to go back and cancel all the medical debts of people who have been billed under the current system.
In a plan released Saturday, Mr. Sanders, the Vermont senator and presidential candidate, proposes wiping out an estimated $81 billion in existing debt and changing rules around debt collection and bankruptcy. He also calls for replacing the giant credit reporting agencies with a “public credit registry” that would ignore medical debt when calculating credit scores.
The proposals reflect Mr. Sanders’s concern that the medical system has placed financial hardships on too many Americans, by discouraging them from seeking needed medical care — but also by saddling them with expensive and unfair bills that can harm their financial security, ding their credit and, in some cases, lead to bankruptcy.
The plan is Mr. Sanders’s latest effort to transform the health care system in America, a goal on which he has staked not just his second presidential run, but much of his political legacy. His proposal also separates him from other presidential candidates: While several of them have come to embrace his “Medicare for all” plan to create a government-run health insurance system, he is the first top-tier contender to call for such drastic measures on medical debt.
“We’re addressing it on both ends,” Mr. Sanders said. “We’re addressing it now by trying to help the people who have past due medical bills. And we’re addressing it by finally creating a health care system that guarantees coverage to people without any premiums, without any deductibles, without any out-of-pocket expenses.”
Medical debt affects Americans who lack health insurance, of course. But it is also increasingly affecting people who have insurance with holes, like high deductibles or limited networks of doctors whose care is paid for. Around 16 percent of adults with credit reports have at least one medical debt, according to a study published last year in the journal Health Affairs.
The plan calls for the government to negotiate and cancel the debts, though it does not specify the precise mechanism.
While eliminating every American’s medical debt would probably not come cheap, Mr. Sanders’s plan could wind up costing far less than the total amount of debt he is seeking to cancel. Craig Antico, a founder of the charity RIP Medical Debt, which buys and forgives medical debt, estimated that the market price for $81 billion in debt could be as low as $500 million. Most past-due medical debt never gets paid, which is why bill collectors are often willing to sell the debts for pennies on the dollar.
The plan would also create a public credit rating agency to “replace” for-profit companies like Equifax, and it would exclude medical debts from credit ratings. It would establish a new legal process, managed by the bankruptcy court system, to help adjudicate medical debts that are not yet in collections.
Studies suggest that medical debts can be less damaging to people’s credit than other kinds of debt, in part because the credit reporting agencies treat people’s ability to pay medical bills as less predictive of creditworthiness than, say, their ability to pay credit card bills or car payments. And, despite the news media’s focus on particularly large medical bills, the typical bill in collections is less than $600, according to the Health Affairs article.
Fear of medical debts causes some people to avoid needed medical care. And medical bills can affect other parts of people’s finances that are harder to measure, showing up as an unpaid credit card bill or a missed loan payment.
“I have a belief that if a plan like this could eliminate the debt that’s causing hardship, it could make a huge difference in people’s lives,”
