LEWISTOWN — With three months remaining until the annual deadline to adopt a state budget, Gov. Josh Shapiro promoted a proposal Tuesday to invest a relatively small amount of tax dollars toward a potential big benefit for Pennsylvanians burdened with medical debt.
Shapiro seeks medical debt relief for thousands of commonwealth residents. In his budget plan, he asks to spend $4 million to erase an estimated $400 million in debt — the lingering bad debt typically sold for pennies on the dollar to collection agencies who pursue debtors for repayment.
The expense would amount to 0.008% of Shapiro’s $48.3 billion general fund budget proposal.
The relief would not only help eligible residents improve their financial footing but would also encourage them to return to their medical providers rather than putting off health care out of fear of amassing further debt, the governor and the plan’s supporters say.
The plan includes additional measures around hospital charity care to prevent those who may be granted relief, and those who might be susceptible, too, from falling into debt again.
“This issue disproportionately impacts rural communities across Pennsylvania,” Shapiro said during a stop at the Lewistown Community Health Center in Mifflin County.
According to an analysis by the Urban Institute, five of the top seven Pennsylvania counties carrying the greatest per capita share of medical debt are rural. Shapiro said 13% of Mifflin County residents have medical debt in collections.
“It is time we do something about it because it’s holding our rural communities back,” Shapiro said.
Pennsylvania’s plan would be to buy the debt and forgive it.
The event is the latest in a continued tour of the commonwealth for Shapiro, a Democrat, as he rallies support for budget initiatives including the Whole Home Repairs Program, public transit investments and increased spending on public education.
Lawmakers face a June 30 deadline to adopt the fiscal 2025 budget, however, that deadline isn’t exactly hard and fast. The current budget was finalized weeks beyond deadline and certain spending wasn’t authorized until mid-December.
The medical debt relief plan is guided by a House bill that was voted onto the Senate last summer with some bipartisan support. Under the plan’s terms, the commonwealth would work with a nonprofit debt relief coordinator to examine, choose and acquire the debt. Eligibility extends to residents living at or below 400% of the federal poverty level or who have debt at least equal to 5% of their household income.
“We are eager to explore all options to ensure affordable access to healthcare for individuals throughout the commonwealth. This is one of the many proposals which will be a part of our discussions,” Kate Eckhart Flessner, spokesperson for the Senate Republicans, said when asked for comment Tuesday.
There is no application process for debtors as proposed in House Bill 78 from Rep. Arvind Venkat, D-Allegheny, an emergency physician, they’re simply informed of the relief after the fact.
“That is as good a return on state dollars that we’re likely ever to see,” Venkat said Tuesday.
The Department of Health estimates 1 million Pennsylvania residents hold a combined $1.8 billion in medical debt.
During Senate budget hearings in March, state Sen. Tracy Pennycuick, R-Berks/Montgomery, asked Dr. Debra Bogen, acting secretary of health, about the plan. Bogen said that ultimately, lawmakers in the General Assembly would decide its final terms if it’s passed into law. As it stands, Bogen said it would help people move on in life, resume medical care and help them take care of their families.
Pennycuick expressed concern for hospitals struggling financially and wondered if earlier intervention and debt negotiations involving the Department of Health might help prevent large debt and greater harm to credit scores.
On Tuesday, Mifflin County Commissioner Robert Postal, a Republican, asked if Shapiro intended to sustain the debt relief plan beyond the 2025 budget. Pennycuick asked the same of Bogen last month.
Both Shapiro and Bogen had the same answer — the program, if implemented, would be analyzed to measure its success and if proven, would be reconsidered for further investment.
“Fiscally, we have the ability to sustain funding over time,” Shapiro said.