i4J's Innovative Online Scorecard Ranks States by Their Medical Debt Policies, Offers Policymakers a Path Forward

With the newly released Medical Debt Policy Scorecard, policymakers in legislatures across the country can now see how their states rank and exactly where they excel —or fall short—in addressing a mounting medical debt crisis affecting one in five Americans.

MedicalDebtPolicyScorecard.org was developed by Innovation for Justice (i4J), the nation’s first and only cross-discipline, cross-institution, and cross-jurisdiction legal innovation lab, to help states adopt robust policies that prevent medical debt, help consumers avoid court involvement, and ensure that court-involved cases do not result in devastating consequences for the patient.

“We’ve created a truly first-of-its-kind resource that gives policymakers a clear path forward,” said Post-Graduate Fellow Gabriela Elizondo-Craig, Medical Debt Policy Scorecard co-Principal Investigator at i4J, which is housed at the University of Arizona James E. Rogers College of Law and the University of Utah David Eccles School of Business. 

Each state’s ranking is based on current policies that reduce the instances of medical debt and effectively assist people experiencing medical debt. 

“So, by enacting the policies they currently lack, states can ameliorate their residents’ medical debt problems, which can quickly spill over into all aspects of life, including employment, physical health, mental wellbeing, housing, and economic stability,” Elizondo-Craig said.

Debt collection lawsuits are the most common type of civil litigation, representing 24% of civil cases, and medical debt comprises the majority of debt collection lawsuits in many jurisdictions. In some jurisdictions, more than 70% of medical debt collection lawsuits end in default judgments against people experiencing medical debt, which translates into wage garnishments, liens, civil arrests, and the inability to secure housing, credit, and employment. 

The U.S. Consumer Financial Protection Bureau reported that “COVID-19 hospitalizations and treatment directly contributed to individuals’ debt load,” and a 2021 study published in the Journal of the American Medical Association reported $140 billion in medical debt owed.

Medical debt is particularly devastating because, unlike consumer debts, patients are unaware of the cost of services at the time they receive care. One lived-experience expert the researchers interviewed had several emergency room visits while uninsured and thousands of dollars in bills.

“The uncertainty of not having medical insurance was really scary, and then the subsequent billing issues were pretty overwhelming,” she said. “I knew I had to go to the doctor. I was trying not to, because I knew that medical bills are really high. And certainly enough, my bills started piling up. I had no explanation when I was in the hospital, before I checked out, of how much my bills would be.”

Policies that increase access to adequate levels of health insurance, financial assistance policies, and Medicaid help prevent medical debt because they intervene upstream, before debt is incurred. 

“While prevention is the ultimate goal, it’s also important to implement policies that help patients with medical debt problem-solve with providers and stay out of court,” Elizondo-Craig said.  

Such policies include those that prevent sending bills to collections, prevent medical debt from being reported to credit bureaus, and require providers to establish and notify patients of procedures for resolving billing disputes, Elizondo-Craig said.

For cases that proceed to court, policies that limit the timeframe in which medical debt can be litigated and limit post-judgment collection such as wage garnishment and home foreclosure are critical to preventing the most devastating consequences and can prevent a never-ending cycle of debt. 

“The cost of medical debt litigation and post-judgment collection adds to the financial distress that led to the medical debt in the first place,” Elizondo-Craig said. “And the costs aren’t only to the person experiencing medical debt. Our court system bears a significant cost burden.”

The scorecard is based on exhaustive legal research confirming which medical debt policies existed in each of the 50 states by Oct. 19, 2021, and included bills introduced on or before Oct. 19, 2021, that were adopted by the end of the legislative sessions. Innovation for Justice employed an interdisciplinary research teamat the University of Arizona and the University of Utah to create the scorecard, while the website MedicalDebtPolicyScorecard.org was developed by Theory and Principle. 

Scoring criteria were based on policies that subject matter experts identified as important and helpful in achieving four policy goals: to reduce the frequency of medical debt; to make it easier to resolve debt out of court; to improve openness, efficiency and equity for those trying to navigate medical debt court cases without a lawyer; and to reduce the negative consequences after court.

"State lawmakers and advocates routinely ask for information about how their state compares to other states and what they can do to help citizens of their state who are struggling with medical debt," said National Consumer Law Center staff attorney April Kuehnhoff, who consulted on the project. "The Medical Debt Policy Scorecard represents an important tool to answer both questions and will hopefully spark new state policy efforts to improve the lives of consumers struggling with medical debts."

About i4J
Housed at both the University of Arizona James E. Rogers College of Law and the University of Utah Eccles School of Business, Innovation for Justice (i4J) applies design- and systems-thinking methodologies to expose inequalities in the justice system and create new, replicable, and scalable strategies for legal empowerment.

Support for this project was provided by The Pew Charitable Trusts’ civil legal system modernization project, which seeks to enhance transparency and efficiency in debt collection lawsuits through policy, process, and technology reforms.