A bipartisan group of state legislators have re-introduced a proposal to create a medical debt relief program that could erase hundreds of millions of dollars in unpaid medical bills. But if a similar program in the City of Pittsburgh is any indication, it’s not guaranteed that Pittsburgh-area residents would benefit.
Rep. Arvind Venkat (D-North Hills) is the prime sponsor of the Pennsylvania Medical Debt Relief Program. As a Pittsburgh-based emergency room physician, Venkat said mounting medical debt is more than just a financial nightmare, it also “keeps patients from seeking necessary care.”
“I've personally seen patients who've gotten very sick or even died as a result of delaying care from the medical debt they have,” Venkat said.
The proposal would set aside state money to buy up and wipe out medical debt for residents with a household income of up to four times the federal poverty level, an amount that varies based on household size. For a family of four to qualify, the household income must be $128,600 or less.
Residents could also qualify for assistance under the proposal if their medical debt amounts to 5% or more of their household income.
An estimated 1 million Pennsylvanians have unpaid medical bills — a debt that amounts to nearly $2 billion across the Commonwealth. Nationwide, about 100 million Americans owe over $220 billion in medical debt, according to an October report from the Consumer Financial Protection Bureau.
The legislation was first introduced last year with support from Gov. Josh Shapiro, who said during a state budget address that he wanted to earmark $4 million in state dollars to fund the program.
“Combined with higher prices at the stores, [medical] debt is an anchor holding those families and communities back,” Shapiro said. “With an investment of just $4 million dollars … we can start wiping out medical debt for Pennsylvanians and give them the chance to succeed financially.”
If the program launches with a $4 million budget this year, residents could see as much as $400 million in debt erased. That’s because medical debt can be sold to nonprofits that buy medical debt for pennies on the dollar.
But not all health systems will sell debt to those nonprofits, including two of Pittsburgh’s largest.
Pittsburgh’s major health systems won’t sell their debt
UPMC and Allegheny Health Network dominate the Western Pennsylvania health care market. And both systems have policies against selling debt to third parties.
Dan Laurent, senior vice president and chief communications officer for Allegheny Health Network, told WESA that while AHN “greatly appreciates the efforts at the local and state levels to address the challenge that medical debt poses to many residents of our region and the Commonwealth,” the system has traditionally declined to sell debt to third parties, “and we have no plans currently to change that policy.”
Susan Manko, vice president of public relations at UPMC, shared a similar sentiment.
“UPMC does not sell debt to another company,” she said.
Both AHN and UPMC pointed to their financial assistance programs as a solution for patients struggling to afford their medical bills. Both nonprofit health systems offer financial help and free care as part of their charitable efforts.
“AHN has a robust financial assistance program for patients who have difficulty with medical bills, and we routinely write off [or] forgive medical debt as part of that process,” Laurent said.
Venkat acknowledged that since most of his constituents seek care at UPMC or AHN, they would be unlikely to see their medical debt erased under the proposal. But he stressed that Pittsburgh-area residents benefit from other stipulations of the bill, including a standardized process for finding financial aid.
“I wish that UPMC and Allegheny Health Network were willing to take on the process of relieving acute medical debt,” Venkat said. “But the bill also gets at [preventing] the accumulation of new medical debt, and that benefits everyone.”
The proposal would standardize how hospitals advertise their charity care programs and guarantee assistance in applying for charity care to “prevent the accumulation of new medical debt.” Venkat said standardizing how Pennsylvanians apply for financial aid makes it more likely that qualified applicants will receive support.
“I’m a practicing emergency physician and I don’t know where to point my patients to these things,” he said. “Nonprofit hospitals like UPMC and Allegheny Health Network have an obligation to have charity care programs. But if those programs are not transparent… then that becomes a challenge,” for patients.
And while Pittsburgh patients with medical debt may not see their bills erased, Venkat noted they are also less likely to have unpaid medical bills compared to rural Pennsylvanians.
“Most of the medical debt that's in collections, where you have impoverished individuals who have medical debt are in collections, they are not in urban and suburban areas,” Venkat said.
That’s true, according to an investigation published in the Journal of the American Medical Association last year. A map of individuals with medical debt shows that in Pennsylvania, major urban areas like Pittsburgh and Philadelphia have significantly fewer residents with unpaid medical bills compared to more rural parts of the state.
Unpaid medical bills hurt small hospitals too, according to Venkat. Unlike large health systems, smaller providers are less likely to be able to write off the cost of unpaid debts or find other ways to manage debt collection.
“Our rural health care providers are between a rock and a hard place,” he said. “They have very tenuous economics, but they also have a mission to try and provide care to vulnerable people who then might accumulate medical debt.”
Venkat said he expects the proposal’s biggest impact to be in Pennsylvania’s more rural communities.
The City of Pittsburgh’s medical debt program stalls
Venkat’s proposal mirrors a similar program launched by the City of Pittsburgh in 2023. City Council directed the city to spend $1 million in federal pandemic aid toward an effort to buy up and clear out as much as $115 million in health care bills.
But two years later, the program has yet to clear a dollar.
The city partnered with Undue Medical Debt (formerly known as RIP Medical Debt) to buy debt owed by households with an income of no more than three times the federal poverty level. Undue Medical Debt, a nonprofit, has previously worked with churches in Mt. Lebanon, Peters Township and Canonsburg to forgive $5 million in medical debt.
But Pittsburgh’s program has been stalled by a struggle to find local health care providers willing to participate. UPMC and Allegheny Health Network said they have no plans to sell their medical debt as part of Pittsburgh’s program.
Councilor Bobby Wilson, who originally proposed the legislation for the city’s program, acknowledged Thursday that the money has yet to be spent.
“Undue Medical Debt has been working to identify applicable debt across all hospital systems which has unfortunately taken a longer time than I initially expected,” Wilson said.
But time is money: federal rules around pandemic aid require the city to spend the $1 million budget by the end of next year or be forced to give it back.
A spokesperson for Undue Medical Debt said the company does not have “an exact timeline, but the first round of debt relief is forthcoming and there will be an announcement when letters are going out to residents.”
Wilson’s office estimated that an announcement about the program moving forward would come this spring.
Federal policy changes could redirect the conversation
Federal officials have also taken notice of how medical debt can put American families in financial straits. Earlier this month, the Consumer Financial Protection Bureau issued a new rule that bars credit agencies from including medical debt on credit reports and prohibits lenders from using medical information against borrowers.
The agency estimated that 15 million Americans will have about $49 million in medical bills removed from their credit reports under the new rule.
Most people who have medical debt carry a significant amount of it, according to a 2024 survey by the Commonwealth Fund. The survey found that 83% of respondents had debt loads of $500 or more and nearly half of respondents said they were paying off $2,000 or more. Hospital care was the most frequently cited source of medical debt.
Venkat applauded the new CFPB rule and said it could ease the stress of choosing between seeing the doctor — incurring more debt — or skipping vital care. But he said he’s concerned that the protections “may not last,” after credit reporting agencies filed a lawsuit to overturn the new rules.
The future of those rules could have a direct impact on Venkat’s effort in Harrisburg.
“If this credit reporting protection goes away, that will push the urgency of our legislation,” he said. But if the protections stay, Venkat said medical debt may take a backseat to easing the medical financial aid process across the state.
“If that reporting [rule] stays in place, then the hospital transparency piece may [become] the more urgent part of what needs to progress,” he said.
The bill to create the state’s medical debt relief program was referred to Pennsylvania’s House Health Committee earlier this month. Venkat said he expects the measure to advance to the Senate based upon the bipartisan support already shown in the House.
Venkat’s bill is co-sponsored by half a dozen other state representatives on both sides of the aisle including Rep. Andrew Kuzma (R-Elizabeth Township).
“All of us, Democrats and Republicans, have constituents who are suffering under the effects of medical debt,” he said. “No one thinks that medical debt is a good feature of our healthcare system, and we're all going to need to take steps to provide relief for our fellow Pennsylvanians so that they can access the care that they need.”
