International Rights Group Calls Out US for Allowing Hospitals to Push Millions Into Debt

By Noam N. Levey / June 15, 2023

Human Rights Watch, the nonprofit that for decades has called attention to the victims of war, famine, and political repression around the world, is taking aim at U.S. hospitals for pushing millions of American patients into debt.

In a new report, published June 15, the group calls for stronger government action to protect Americans from aggressive billing and debt collection by nonprofit hospitals, which Human Rights Watch said are systematically undermining patients’ human rights.

“Given the high prevalence of hospital-related medical debt in the US, this system is clearly not working,” concludes the report, which draws extensively on an ongoing investigation of medical debt by KFF Health News and NPR.

The report continues: “The US model of subsidizing privately operated hospitals with tax exemptions in the hope that they will increase the accessibility of hospital care for un- and underinsured patients allows for abusive medical billing and debt collection practices and undermines human rights, including the right to health.”

Nationwide, about 100 million people — or 41% of adults — have some form of health care debt, a KFF survey conducted for the KFF Health News-NPR project found. And while patient debt is being driven by a range of medical and dental bills, polls and studies suggest hospitals are a major contributor.

About a third of U.S. adults with health care debt owed money for hospitalization, KFF’s polling found. Close to half of those owed at least $5,000. About a quarter owed $10,000 or more.

The scale of this crisis — which is unparalleled among wealthy nations — compelled Human Rights Watch to release the new report, said researcher Matt McConnell, its author. “Historically, Human Rights Watch has been an organization that has focused on international human rights issues,” he said. “But on medical debt, the U.S. is a real outlier. What you see is a system that privileges a few but creates large barriers to people accessing basic health rights.”

Hospital industry officials defend their work, citing hospitals’ broader work to help the communities they serve. “As a field, hospitals provide more benefit to their communities than any other sector in health care,” Melinda Hatton, general counsel at the American Hospital Association, wrote in a response to the Human Right Watch report.

Federal law requires private, tax-exempt hospitals — which make up more than half the nation’s medical centers — to provide care at no cost or at a discount to low-income patients. But reporting by KFF Health News and others has found that many hospitals make this aid difficult for patients to get.

At the same time, thousands of medical centers — including many tax-exempt ones — engage in aggressive debt collection tactics to pursue patients, including garnishing patients’ wages, placing liens on their homes, or selling their debt to third-party debt collectors.

Overall, KFF Health News found that most of the nation’s approximately 5,100 hospitals serving the general public have policies to use legal action or other aggressive tactics against patients. And 1 in 5 will deny nonemergency care to people with outstanding debt.

“Medical debt is drowning many low-income and working families while hospitals continue to benefit from nonprofit tax status as they pursue families for medical debt,” said Marceline White, executive director of Economic Action Maryland. The advocacy group has helped enact tighter rules to ensure Maryland hospitals make financial assistance more easily accessible and to restrict hospitals from some aggressive debt collection tactics, such as placing liens on patients’ homes.

Similar efforts are underway in other states, including Colorado, New Mexico, New York, Oregon, and Washington. But many patient and consumer advocates say stronger federal action is needed to expand patient protections.

The Human Rights Watch report — titled “In Sheep’s Clothing: United States’ Poorly Regulated Nonprofit Hospitals Undermine Health Care Access” — lists more than a dozen recommendations. These include:

• Congress should pass legislation to ensure that hospitals provide at least the same amount of charity care as they receive in public subsidies.

• The IRS should set uniform national standards on patients’ eligibility for financial assistance at nonprofit hospitals. Currently, hospitals are free to set their own standards, resulting in widespread variation, which can confuse patients.

• The Consumer Financial Protection Bureau, a federal watchdog agency, should crack down on debt collectors that do not ensure that patients have been screened for financial assistance before being pursued.

• The federal Centers for Medicare & Medicaid Services, which administers the two mammoth public insurance programs, should penalize hospitals that do not provide adequate financial assistance to patients.

“Nonprofit hospitals are contributing to medical debt and engaging in abusive billing and debt collection practices,” McConnell said. “The reason this keeps happening is the absence of clear guidelines and the federal government’s inadequate enforcement of existing regulations.”