Lawmakers examine high medical debt in Oklahoma

OKLAHOMA CITY Medical debt in Oklahoma is among the highest in the U.S., and state House lawmakers continue to look at ways to reduce it at the legislative level.

The House Banking and Finance Committee met Tuesday to gain insight on the common causes of medical debt, and why Oklahoma ranks as the second-worst state for outstanding payments on medical bills.

Data from the Urban Institute shows that 19.8% of adults had medical debt in collections in their credit files, the highest in the region, and second to only West Virginia. For comparison, the national average was 11.6%.

As for why medical debt is higher in Oklahoma than virtually anywhere else in the U.S., Breno Braga, principal research associate at the Urban Institute said chronic conditions are one reason.

“Adults with chronic conditions need to seek care more often, and therefore will have more medical bills to pay, even when they're covered by health insurance,” Braga said.

According to CDC data from 2022, 14% of adults in Oklahoma had three or more chronic conditions, which include asthma and diabetes. The prevalence of chronic illness in Oklahoma is higher than the national average.

With the exception of Pontotoc County, every other county in Oklahoma has a medical debt rate higher than the U.S. average. Counties in the southwest corner of the state have the highest levels of medical debt.

Braga said the results of efforts in previous years to address the issue are still materializing. He pointed to Oklahoma expanding Medicaid coverage through the Affordable Care Act in 2021. He said there’s evidence that expanded Medicaid results in a decline in medical debt, but it might take a few more years for the policy to affect consumers’ credit files.

Price transparency laws are another important factor, Braga said.

State Rep. Suzanna Schreiber, D-Tulsa, co-authored House Bill 4148 in the 2024 session, which requires health-care providers or debt collectors to notify the court that the patient is aware of the costs of care before a collection lawsuit can commence.

“Transparency laws might increase competition in the healthcare market and reduce out-of-pocket expenses for patients. Nevertheless, we need more evidence of the direct effect of price transparency laws on consumers' medical debt,” Braga said.

Several states now provide enhanced cost-sharing subsidies to the marketplace and other coverage programs. New York has adopted a Basic Health Program, which was designed to give states the ability to provide more affordable coverage for low-income residents.

Braga said the program allows working homes below 250% of the federal poverty line to obtain coverage with no premiums or deductibles. Other states offer free patient advocacy programs to help patients navigate the healthcare system.

The median amount of medical debt in collections in Oklahoma in 2022 was $886, according to the Urban Institute.

Chi Chi Wu, senior attorney at the National Consumer Law Center, said while advocacy programs and Medicaid expansion are parts of a formula that can reduce medical debt, a much shorter solution is banning the ability to put the debt on credit reports.

“You know, getting sick and having it really impact your financial life is bad enough, but then it shows up on a credit report, and it now hurts that consumer's ability to get a job, an apartment, a credit card, it really hampers their financial life,” Wu said.

Wu said 58% of debt collection items on credit reports were medical debt, which amounts to tens of millions of consumers.

“The thing to understand about medical debt is that it's not the hospital, it's not the doctors, it's not the dentist, sending the medical debt to credit reports. It's debt collectors,” Wu said.

Wu said the reason medical debt is sent to credit reports is multifactorial. She said it’s partially due to cost sharing and the way health care is paid for in the U.S.

“If you think about it, most transactions you’ve got a buyer and a seller, but with medical debts, you have a third party, and that's the insurance company, and the third party, actually is (oftentimes) the payer, and so that leads to a lot of complications, it leads to confusion,” Wu said.

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