Arizona medical debt measure could be a model for Democrats nationwide

Arizona voters could approve a measure designed to stop creditors from gouging people with medical bills.

Other states are taking notice.

If the Arizona measure passes, the union-backed initiative is likely to be replicated in other red states where progressives have successfully pushed ballot measures to accomplish what conservative legislators will not, like expanding Medicaid, raising the minimum wage and establishing paid sick leave.

Local advocacy groups in several states that have passed progressive ballot measures in recent years — such as Arkansas, Missouri and Oklahoma — have expressed interest in launching their own medical debt campaigns, according to the Fairness Project, which supports passing progressive policies through the referendum process.

“This model of protecting more working families from the impacts of even small amounts of debt will be a big part of what we see go to the ballot in the upcoming cycle or two,” said Kelly Hall, the Fairness Project’s executive director.

The November measure comes as health care advocates at the state level grapple with how to help residents with the rising costs of health care now that it appears Congress will be unable to pass any significant reforms to address the issue. Nearly 1 in 10 adults in the U.S. owe medical debt, including 3 million who owe more than $10,000, according to an analysis by the Kaiser Family Foundation.

Democratic state lawmakers have taken up legislation in recent years to address health care costs through public health insurance options, health care cost commissions and medical debt reform. Last year, California, Colorado, Illinois, Maryland, Nevada and New Mexico passed bills addressing medical debt.

The Biden administration in April sought to tackle medical debt by directing federal agencies to eliminate such debt as a factor to access federal resources, streamlining debt relief for veterans and targeting through the Consumer Financial Protection Bureau unscrupulous debt collectors who try to collect on debt that’s already been paid or pose as law enforcement.

An estimated 875,000 Arizonans — about 12 percent of the state — have medical bills in collections, with the median debt at $719, according to an analysis by the Urban Institute.

If the measure passes, creditors will not be allowed to charge more than 3 percent interest on medical debt, down from 10 percent. It will also increase the value of a debtor’s home protected from creditors from $250,000 to $400,000 and decrease the portion of a debtor’s weekly disposable income subject to debt collection from 25 percent to 10 percent.

“We just don’t believe anybody should lose their home or their car, their means of getting to work and earning a living because of a medical bill they can’t pay,” said Rodd McLeod, spokesperson for Healthcare Rising Arizona, which is backing the ballot measure. “A measure like this is an attempt to try to create some breathing room for families who are struggling with debt.”

Opponents — who, by and large, represent creditors — argue the proposal is too broad because the provisions shielding assets would apply to all forms of debt, not just medical debt, a move they say will devastate the state’s lending market. The Arizona Chamber of Commerce and Industry, the Arizona Bankers Association and the Arizona Free Enterprise Club are among the organizations opposing the measure.

“It’s marketed as a medical debt initiative but yet impacts all collection remedies across the board,” said Amber Russo, spokesperson for Protect Our Arizona, which is opposing the ballot measure. “My concern with this issue is that it is a bridge too far.”

Protect Our Arizona has also taken aim at the fact the Arizona measure is being financed by SEIU-UHW, the California health care union that established the Fairness Project in 2015 to push progressive ballot measures across the country and, more recently, backed Healthcare Rising Arizona to organize Arizona health care workers and patients around health care reform.

SEIU-UHW and Healthcare Rising Arizona have pumped roughly $8 million in cash and in-kind contributions as of the end of September into Arizonans Fed Up with Rising Healthcare, the primary PAC backing the measure. Opponents have used those figures to make their case that a California union with “deep pockets” is “buying legislation” — mirroring complaints made particularly by conservatives across the country about other progressive ballot measures.

“It has such a gross feeling for me because it looks to me like buying legislation,” Russo said.

The union did not respond to multiple requests for comment, but in-state supporters of the measure, including Kelly Griffith, CEO of the Tucson-based Center for Economic Integrity, said the union has for the first time made it possible for advocates of debt reform to be proactive at the ballot box instead of reactive, as the group was when it mounted a defense to a payday loan measure in 2008.

“Prop. 209 is actually an offensive effort that our little organization all by itself would not have the financial resources to tackle,” Griffith said.

Other supporters include the Arizona Public Health Association, the Southern Arizona AIDS Foundation and several local unions.

Protect Our Arizona, by contrast, has raised roughly $530,000, much of that from the Arizona Creditor Bar Association. Opponents of the ballot measure on the ground in Arizona say that the big banks who might be able to help their cause haven’t shown much interest in the measure.

“Do big banks exist in the financial industry? Sure. But I think you have so much more of a risk tolerance at the higher level that they’re going to wait and see what happens,” Russo said. “Maybe by the time this hits Colorado or Michigan or Illinois then they’re going to go, ‘Uh-oh, look at this trend.’”

The ballot measure hasn’t drawn nearly as much attention as Arizona’s high-profile races for governor and senator, where polls show the two races remain up for grabs. But as national Democrats have struggled to talk about inflation and the economy, the political landscape could provide the Arizona ballot measure with an extra boost as voters remain highly cost sensitive heading to the ballot box.

“We take nothing for granted in any election, particularly not in a state like Arizona. That said, this is a very intuitive, straightforward issue for voters to understand,” Hall, the Fairness Project’s executive director, said. “The feedback from the electorate, such as we can garner it so far, is that there’s overwhelming support for this issue across party lines and statewide, so we’re feeling very enthusiastic about the outcome.”

Opponents argue the measure won’t do anything to address the underlying costs of health care, noting that no health care organizations, including the state’s biggest hospitals, have come out against the measure. But health care experts say the ballot measure could help people deal with some long-term consequences of unpaid medical bills.

“These efforts help people with medical debt free up some month to month finances and give them some relief, but it doesn’t make people’s medical bills go away or it doesn’t make health care any cheaper,” said Krutika Amin, associate director at the Kaiser Family Foundation’s program on the ACA. “While it helps people free up finances, there’s also this health care affordability issue.”

Eva Marie Stahl, vice president of public policy at RIP Medical Debt, a nonprofit that purchases people’s medical debt so they don’t have to pay it, acknowledged the measure only addresses part of the overall medical debt problem but argued: “It’s worth chewing gum and walking at the same time.”

“It’s a really novel approach and it runs parallel to Medicaid expansion campaigns,” said Stahl, whose nonprofit has endorsed the measure. “It’s a helpful way to begin a conversation with the public about medical debt. It’s really easy to understand. It affects everyone. Even though we talk about it being a racial justice issue, which it is because it disproportionately impacts Black households in particular, it’s an everyone issue.”