Minnesota's future: How to make ours the first medical-debt-free state

Opinion editor's note: Star Tribune Opinion publishes a mix of national and local commentaries online and in print each day. To contribute, click here. This article relates to Star Tribune Opinion's June 4 call for submissions on the question: "Where does Minnesota go from here?" Read the full collection of responses here.

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Recently, a Fergus Falls-based nonprofit — the CA Foundation — made a contribution to RIP Medical Debt to wipe out $3.3 million of medical debt for nearly 3,700 Minnesotans. I oversee the foundation and am a principal donor. Beginning this week, thousands across the state are receiving letters saying that their medical debt is gone and that relevant blemishes on their personal finance records will be erased. They will be more likely to once again engage in good preventive health care without shame.

In making this donation, I said Minnesota could be the first medical-debt-free state. Many people have asked me, "Is that possible?" Yes, but it takes a village. We already have one of the lowest percentages of people with medical debt on credit reports — 2% vs. 9% nationally, according to a well-known study by the Urban Institute. But look at it from another angle: There are about 150,000 residents in our state with nearly $400 million in debt. And some experts believe these numbers are artificially low because debt is often in limbo for years before being turned over to collectors.

How do we do it? Here are five principles to guide us. These will require action by the governor, votes by the Legislature, cooperation from hospitals and providers, involvement by citizens and a statewide method to pool dollars for donations.

1) Many cities and counties around the country are partnering with RIP Medical Debt to use American Rescue Plan Act funds from the federal government to abolish medical debt directly from local hospitals. Can an entire state petition to access these funds? Yes. Minnesota, be the first.

2) Our lawmakers should create a new program to "check a box" on their tax returns to donate $5 to a statewide pool to relieve medical debt. Sure, there will be some partisan debate on how to do it. But if 20% of the state's 3 million taxpayers donate $5, it would be $3 million a year. This amount — minus administrative expenses — would wipe out medical debts for an estimated 10,000 Minnesotans each year. In 10 years, there might be no unpaid medical debt. With more awareness and generous gifts from corporate leaders, celebrities and the affluent, Minnesotan's medical debt could be gone in five years.

3) Minnesota's attorney general and nonprofit hospitals have agreed to a best-in-the-nation contract to reduce medical debt that hurts credit scores. This program should be advertised in public spaces and to businesses so that state residents can know about their rights. It should be visible in hospitals or at providers. There little cost to taxpayers for this. It could be done with action by the governor.

4) Improve transparency. Most people are shocked when they learn a health care provider sold their $10,000 medical bill for as little as $200. There are many reasons that information is not readily able — it would destabilize the business of debt collection and disrupt practices for hospitals and providers. And many would argue that there is no way, nor a role, for government to regulate this type of disclosure. All true. But let's begin the discussion. Shouldn't each of us know the value of our own debt? A little sunshine could go a long way.

5) Develop a citizens brigade. If dollars are accumulated to erase medical debt — no matter how it is done — there will need to be some citizen committee to determine guidelines to disburse funds. Much of medical debt comes from life-threatening events. Years ago, when I was told I had colon cancer after a routine colonoscopy, the next day I had every imaginable kind of body scan and surgery the following day. Luckily, I had money in savings to cover out-of-pocket expenses. Had cancer arrived three years later, I might not have. Medical debt is a spin of the roulette wheel. And, as with COVID, no one is immune.

The status quo must change. Let's make Minnesota the first medical-debt-free state.

Jeff Smedsrud is a healthcare reform advocate. He has started and led companies in insurance and finance. He serves on several nonprofit boards, including RIP Medical Debt.