Bernie Sanders Releases Plan To Wipe Out $81B In Medical Debt

Along with cancelling $81 billion in medical debt, Bernie's plan aims at creating a public credit registry and excluding medical debt from credit scores.

Is it just me or does it seem like Bernie's medical debt erasure plan is just the latest attempt by Democrats to bribe Americans into voting for them?

The New York Times has more details into what little specifics there are of Bernie's grandiose medical debt-relief plan:

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.

Though not going into much detail, Bernie Sanders did say that the $81 billion in medical debt would be paid for with a tax on corportations based on the salary of their CEOs.

But, that's all he really said about the cost of the medical debt-relief plan.

Does this scream "empty political promise" to you?

Reuters noted:

The Sanders campaign said he would pay for the medical debt proposal with a tax on corporations based on their pay for chief executives, although details of that proposal have not been released yet. 

Sanders had discussed the broad outline of the plan last month. It builds on his proposal for Medicare for All, a government-run healthcare insurance system based on the existing insurance program for Americans 65 and older, and follows a similar proposal from Sanders to wipe out Americans’ student debt. 

And, despite Bernie's claim that medical debt is a primary cause of bankruptcy for low-income Americans, this is a grand overstatement.

As The Washington Examiner observed:

“A staggering 79 million Americans struggle to pay their medical bills or are paying off medical debt, including more than half of those making less than $40,000 a year,” the Vermont senator said in Saturday's statement. “Last year alone, 8 million people were pushed into poverty due to medical expenses.” 

           

Bernie also cited, as a motivation for the plan, the number of Americans driven to bankruptcy filing each year due to high medical costs. 

           

“In fact, 66.5 percent of all bankruptcies are connected to medical issues — both because of the skyrocketing cost of care, and because of a patient’s time away from work and the subsequent expenses and lack of income," his proposal said. "Studies show that 500,000 people are bankrupted by medical expenses each and every year — and the true number may be far higher.” 

           

The 500,000 figure comes from a March editorial in the American Journal of Public Health  in which Dr. David Himmelstein, the lead author, sampled debtors' bankruptcy filings each year from 2013 to 2016 and found that medical costs were linked to 500,000 bankruptcies annually. 

           

Yet Sanders' claim overstates the role of medical debt in causing bankruptcies. Himmelstein's research does not say the bankruptcies were directly attributable to medical bills; rather, it says that medical expenses played some role in those people's financial distress. 

           

“Often, a bankruptcy has multiple causes, and disentangling one from the others isn’t something that can be done,” Himmelstein told the Washington Examiner in a recent interview. “There are a whole lot of things in life that have multiple causation and can’t be fully disentangled.”