Financial Assistance Policy, Hospital Charity Care, and Medical Debt in Collections.

Abstract

Medical debt is a public health crisis. Hospital bills represent the majority of medical debt and present an opportunity for policy intervention. State financial assistance policies (FAPs) require hospitals to expand patient eligibility. However, it is unknown whether these policies alleviate medical debt. To estimate the association of Oregon's FAP with medical debt in collections and hospitals' charity care (ie, free or discounted care for patients qualified for FAPs) and bad debt (ie, total amount of uncollectible patient accounts) expenditures. This cohort study examined county- and hospital-level difference-in-differences and event study models covering the period from 2015 to 2022. This study included 689 counties and 582 hospitals located in Oregon and states that expanded Medicaid in 2014 but did not implement any FAPs. Data were analyzed from January to July 2025. Oregon FAP. Percentage of the county population with medical debt in collections, and hospital charity care and bad debt expenditures as a percentage of operating expenses. The sample included 540 hospitals in the control group (43 teaching [7.9%], 199 critical access [36.8%], and 279 metropolitan hospitals [51.6%]) and 42 hospitals in Oregon (3 teaching [7.1%], 15 critical access [35.7%], and 27 metropolitan hospitals [64.3%]) as well as 656 counties in the control group and 33 counties in Oregon. Relative to control states, Oregon's FAP was associated with a larger decrease in the percentage of the county population with medical debt in collections (-1.67% [95% CI, -3.26% to -0.10%]; P = .04), equivalent to 872 to 1180 fewer individuals with medical debt in collections per county. Oregon's FAP was also associated with larger charity care expenditures (0.31% [95% CI, 0.16% to 0.45%]; P = .001), or $227 200 to $639 000 per hospital, compared with the control states. There were no changes in bad debt expenditures. In this cohort study, Oregon's FAP was associated with a larger decrease in the percentage of the population with medical debt in collections and larger hospital charity care expenditures. State efforts like that of Oregon's have the potential to alleviate medical debt, especially in light of federal policy changes that are likely to exacerbate the medical debt crisis.