New Jersey governor wants medical debt relief package

New Jersey Gov. Phil Murphy has made medical debt relief a top priority in the coming year.

New Jersey Gov. Phil Murphy has asked lawmakers to craft legislation to help residents with medical debt. (Image: New Jersey governor's office)

In his annual “State of the State Address,” Murphy asked lawmakers to introduce a medical debt relief package.

“Right now, in New Jersey, more than one in ten of our neighbors has medical debt in collections,” Murphy said in the speech, which he delivered Tuesday. “That number is even higher in communities of color. And we know that when someone is saddled with medical debt, they are less likely to seek medical care.”

“Because they worry about being harassed by predatory debt collectors, who will garnish their wages, or even seize their property,” Murphy said. “So if they see warning signs about their health, they may avoid seeking help. And lives are needlessly put at risk. That is dangerous, and it is wrong.”

Murphy is seeking lawmakers to support a proposal that would bar hospitals and doctors from sending unpaid medical bills to collectors for 180 days after patients get their first bill, NJ.com reports. The governor also wants legislation that would block medical debt of less than $500 from appearing on credit reports, and measures requiring debt collectors to wait a year before reporting debts to credit agencies, according to the report by NJ.com.

The New Jersey governor is also pushing lawmakers for measures to require more transparency in medical bills. He’s asking lawmakers to name the measure in honor of Louisa Carman, a staffer in the state’s Office of Health Care Affordability and Transparency. She died in a car accident on New Year’s Day.

“Pulling people out from crushing medical debt is vital,” Murphy said. “But so is protecting them from falling down that hole in the first place.”

In his address, Murphy also says he wants to expand a $10 million program to help residents pay off medical debts.

“Let us work together to ensure our neighbors don’t have to start a GoFundMe campaign just to afford potentially lifesaving health care,” Murphy said in his address.

He also saluted Andrew Gregory, a New Jersey resident who lost his wife, Casey McIntyre, to ovarian cancer. They started a fundraising campaign to aid families struggling to pay their medical debts, and raised nearly $220,000.

Medical debt has gained growing attention from policymakers, including from New Jersey’s neighbors.

New York Gov. Kathy Hochul wants legislation that would make it harder for hospitals to sue patients to collect debts.

Under Hochul’s plan, hospitals in New York would be prohibited from suing patients if their income is less than 400% of the federal government’s poverty level. For a family of four, the income limit would be $120,000. More than 700,000 New York residents have medical debt in collections, according to Hochul’s office.

Last month, Hochul signed legislation that bars hospitals and healthcare providers from reporting medical debt to credit agencies.

Roughly one in five U.S. households carries some form of medical debt, according to a 2022 report from the Consumer Finance Protection Bureau.

In September 2023, the bureau said it was considering measures on a national level to prevent consumer reporting companies from considering medical debt and collection information in consumer reports.

Across the nation, 14 states, including California, New York, and Illinois, have some kind of conditions before hospitals can send bills to collections, according to a September 2023 analysis by the Commonwealth Fund. Four states have provisions prohibiting medical bills being sent to collections if residents have lower incomes.