Tackling Medical Debt: New Protections for New Jersey’s Latino/x Communities
Written by:
Saray Ramos - Director of Policy and Advocacy (MPA Candidate, Rutgers University)
Dr. Jesselly De La Cruz, LCSW, DSW - Executive Director
On July 22, 2024, Governor Phil Murphy signed the Louisa Carmen Medical Debt Relief Act into law, marking an important milestone in addressing the issue of medical debt in New Jersey. With 1.5 million residents struggling under the weight of medical debt this law offers critical protections.
The Burden of Medical Debt in Latino/x Communities
As the cost of living continues to rise—with increases in groceries, rent, gas, and other daily essentials—medical debt only adds to the financial strain, especially for those with lower incomes. For Latino/x and immigrant communities, the burden of medical debt is particularly heavy. Unexpected events, like a sudden illness or an accident requiring emergency care, can result in bills that are nearly impossible to manage, making an already stressful situation even worse. Studies show that many Latinos avoid seeking medical care because of the high costs. A lack of insurance or an inability to afford the necessary medical procedures often forces them into debt. According to a UNIDOSUS report, which surveyed 1,200 Latinos across Arizona, California, and Texas, half of Latino households have some form of medical debt, with a quarter unsure if they can pay it off in the next 10 years. More than half of these households have $500 or less in total savings, leaving them financially vulnerable when healthcare needs arise.
Disparities in wealth also play a significant role. Latino/x individuals are more likely to avoid seeking medical care due to concerns about cost, trust in medical providers, and other factors, increasing their risk of accumulating medical debt. In New Jersey, Hispanic/Latinx and Black/African American residents are more likely than white residents to report that medical debt has prevented them or a family member from receiving necessary medical care. Nearly half (49%) of Hispanic/Latinx respondents report avoiding medical care due to medical debt, further widening health disparities in these communities.
In fact, 32% of New Jersey residents in communities of color have debt in collections, compared to just 16% of white residents. For Latino/x families, who already face barriers to healthcare access, medical debt often discourages future care. This is not only a financial burden but also a significant barrier to receiving essential healthcare, as 36% of New Jerseyans report delaying or avoiding treatment due to cost.
What the Louisa Carmen Medical Debt Relief Act Does
With many families struggling to cope with the financial implications of unexpected healthcare costs, this law introduces crucial protections designed to ease their financial strain. While it does not eliminate the problem of medical debt, it provides essential safeguards that can help families navigate their challenges. Here’s a closer look at the key provisions of the Act and how they can benefit communities in need:
Medical Debt and Credit Reporting: One of the law’s most significant provisions is the ban on reporting most medical debt to credit reporting agencies. For many, credit impacts can create long-term financial barriers, such as making it difficult to buy a home or secure a loan. This protection helps to shield families from the ripple effects of medical debt, though it doesn’t erase the debt itself.
Interest Rate Caps: Starting in July 2025, the law will cap interest rates on medical debt at 3%, which will prevent medical bills from escalating as quickly. While this makes managing debt more feasible, it doesn’t eliminate the high costs of healthcare that contribute to medical debt in the first place.
Wage Garnishment Protections: The law prohibits wage garnishment for residents earning up to 600% of the federal poverty level. This is a crucial protection for working Latino families who might already struggle with wages and job stability. However, this provision applies only to those under specific income levels, leaving many still vulnerable.
Reasonable Payment Plans: Another key protection requires healthcare providers to offer reasonable payment plans to patients. While this can make repaying debt more manageable, the need for such plans highlights the underlying issue: healthcare costs are still too high for many families to afford upfront.
Although the Louisa Carmen Medical Debt Relief Act offers valuable protections, it is important to recognize that it doesn’t solve the larger problem of medical debt entirely. This law is a step toward addressing health inequities in New Jersey, but there is still much work to be done to ensure that all families have access to affordable healthcare without the fear of financial ruin.
To learn more about the bill, you can access a recording of our "Medical Debt Relief - Lunchtime Listening Session.” The session provides an overview of key health policy initiatives in New Jersey, including Cover All Kids, Medicaid Redetermination, and Open Enrollment for DACA recipients. Medical Debt Relief - Lunchtime Listening Session
Share Your Story
We are gathering stories from those who have been impacted by medical debt, especially in the Latino/x community. Sharing your experience can help raise awareness of the ongoing challenges and inspire further action. If you or someone you know has struggled with medical debt, please consider sharing your story here: https://forms.gle/oUvvxxEW48Km7apX8
Sources:
“Many New Jersey Residents Struggle with Medical Debt, Highlighting Healthcare Affordability Issues Even for Those with Insurance: Altarum.” Healthcare Value Hub, September 2022, https://www.healthcarevaluehub.org/advocate-resources/publications/many -new-jersey-residents-struggle-medical-debt-highlighting-healthcare-affordability-issues-even-those-insurance.
“Medical Debt.” Community Catalyst, https://communitycatalyst.org/issues/affordability/medical-debt/.
“Office of the Governor | Governor Murphy Signs "Louisa Carman Medical Debt Relief Act.”” NJ.gov, 22 July 2024, https://www.nj.gov/governor/news/news/562024/20240722a.shtml.
“Second Edition of our Latino Banking and Financial Health Survey.” UnidosUS, https://unidosus.org/wp-content/uploads/2024/06/unidosus_oportun_bsp_latinobankingandfinancialhealthsurvey_memo_61124.pdf.
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