Who’s suing patients over medical debt? It’s not just hospitals anymore

Hey there —

This week we’re highlighting a trio of stories that shed new light on issues An Arm and a Leg has been tracking closely:

• A sharp investigation from our partners KFF Health News on who’s actually filing medical debt lawsuits.
• How one state is cracking down on aggressive medical credit card marketing.
• Some new, encouraging data suggesting more seniors can afford their medications.

Let’s go!

In at least one state, doctors are now suing patients more than hospitals are

One of the most perplexing realities we’ve come across while reporting on the U.S. health care system (and there are MANY) is this: Hospitals routinely sue their patients over medical debt, yet recoup very little money in the process. So why do they bother?

In fall 2023, we published a two–part investigation with Scripps News and The Baltimore Banner digging into that question.

Since then, we’ve been tracking efforts by advocates, lawmakers, and federal agencies to rein in the most aggressive medical debt collection practices — like destroying a patient’s credit, garnishing their wages, or foreclosing on homes.

And now, in at least one state — Connecticut — KFF Health News and the CT Mirror found that public pressure persuaded many hospitals to stop suing patients over medical debt altogether. Cool!

The catch? Other health care providers didn’t follow suit. Actually, their lawsuits have increased.

And recent legislation targeting aggressive medical debt collection practices doesn’t cover non-hospital health care providers. Neither do medical debt protection laws in most other states.

As one Connecticut state senator put it, lawmakers will need to to “go bigger if that’s where the heart of the matter is.”

On a brighter note, Connecticut has passed another law looking out for people facing medical debt…

New rules around CareCredit and other “medical” credit cards

Last week, Governor Ned Lamont signed a bill limiting the aggressive and confusing marketing of medical credit cards inside doctors’ offices and veterinary offices.

Connecticut joins California, Illinois, and New York in passing laws to protect patients from these financial traps.

Health care providers are increasingly pushing medical credit cards as an alternative to in-house payment plans. CareCredit, the biggest player in the field, says these cards are accepted at more than 285,000 locations, including many hospitals.

The appeal for providers is pretty straightforward: Outsourcing billing to a third party reduces administrative burden.

According to Patricia Kelmar, senior director of health campaigns with PIRG, patients frequently don’t understand what they’re agreeing to — whether they’re handed a form at the front desk or an iPad in the exam room.

“It’s just not the place to be looking at terms and conditions,” she says.

As we covered in a previous First Aid Kit, those terms and conditions usually include something scary: deferred interest. In most states, medical debt tied to medical credit cards also isn’t protected by the same consumer laws that cover regular medical debt — New York being the notable exception.

Connecticut’s new law adds meaningful friction that could make it harder for patients to sign up for something they don’t understand:

• Health care providers can no longer submit or help fill out applications on a patient’s behalf.
• Provider logos are banned from credit card marketing materials, making it clearer the card isn’t affiliated with the doctor or hospital.
• Providers can’t charge these cards for services covered by Medicaid.

Kelmar, who’s collecting stories from patients, says it’s a step forward — and a pretty unlikely one, given that Synchrony Financial, which operates CareCredit, is based in Stamford, CT.

Apizza, anyone?

A law from 2022 is making a real difference for seniors

A new study in JAMA finds that legislation capping out-of-pocket prescription costs for seniors has helped many stay on top of their medications.

And, as Undark explains, those good results may be only the beginning. The law was only beginning to phase in during 2024; the full out-of-pocket cap took effect in 2025, and the study’s authors expect even stronger results to follow.

That’s it for this week.

And hey, if you’re noticing we’re sharing a lot more links than usual in these newsletters, your eyes do not deceive you. The news cycle is a firehose of, let’s face it, unbearably grim news.

Our goal with these newsletters is to share stories you’d never get a phone alert for but that we think First Aid Kit subscribers would want to know about.

What do you think? Seeing something we should be covering? Let us know! We’d love to hear from you — reply here or fill this out.

— Emily