Who comes next in the debt relief game? Just in time for the presidential election, it turns out, Democrats are promising to use federal money to allow Americans to avoid paying $7 billion in medical debt.

The Biden-Harris administration’s efforts to forgive about half a trillion dollars in student loan debt, without congressional approval or constitutional daintiness, has been the subject of extensive litigation. Republicans have criticized it as a vote-buying giveaway to Democrat-dominated universities and wealthier, college-educated voters at the expense of blue-collar workers. 

The medical-debt forgiveness plan has been lower-profile, but it’s a similar idea, spending billions of federal taxpayer dollars to subsidize customers of heavily unionized, labor-intensive, expensive, frequently non-profit or government-run hospitals and health care systems.  

Vice President Harris was championing the idea as a signature domestic policy initiative even before she became the Democratic presidential candidate. In a press call in early June, 2024, Ms. Harris called medical debt “simply not fair.”

“No one should be denied access to economic opportunity simply because they experienced a medical emergency,” Ms. Harris said, announcing, “We will soon make it so that medical debt can no longer be included in your credit score.”

“We have forgiven over $650 million so far, and we plan to forgive another $7 billion — with a ‘B’ — for millions of Americans across the nation,” she said. In a July 29 statement, Ms. Harris praised a North Carolina action that she said “has the potential to relieve $4 billion in medical debt for two million individuals and families.”

“As someone who has spent my entire career fighting to protect consumers and lower medical bills, I am committed to continuing to relieve the burden of medical debt,” Ms. Harris said in the statement.

The North Carolina plan lets hospitals opt into a program that rewards them with higher Medicaid reimbursement rates if they take six steps:

• Relieve all medical debt deemed uncollectible dating back to January 1, 2014, for any individuals not enrolled in Medicaid with incomes at or below at least 350 percent of the federal poverty level or for whom total debt exceeds 5 percent of annual income.  
• Relieve all unpaid medical debt dating back to January 1, 2014, for individuals who are enrolled in Medicaid.  
• Provide discounts on medical bills of between 50 percent and 100 percent for patients with incomes at or below 300 percent of the federal poverty level, with the amount of the discount varying based on the patient’s income.
• Automatically enroll people into financial assistance, known as charity care, by implementing a policy for presumptively determining individuals eligible for financial assistance through a streamlined screening and income validation approach. 
• Not sell to debt collectors any medical debt for consumers with incomes at or below 300 percent of the federal poverty level.  
• Not report a patient’s debt covered by these policies to a credit reporting agency.

Local press coverage explained, “Only people of certain income levels would qualify for the plan. For those using private insurance, eligible people would need to make up to three-and-a-half times the federal poverty level, or about $52,700 per year for an individual or $109,200 per year for a family of four. People on Medicaid would automatically qualify.”

Ms. Harris said the medical debt forgiveness happened “with support from our American Rescue Plan, legislation that I was proud to advance with my tie-breaking vote in the Senate.” Barack Obama carried North Carolina for the Democrats in 2008, and the state has a Democratic governor, Roy Cooper, who this week withdrew from consideration to be Ms. Harris’s running mate.

Effectively, the forgiveness action transfers the debt from the individual patients and the hospitals to the overall American taxpayers. This week, the total public debt reached more than $35 trillion, a new high. The federal government has been adding to that debt with annual deficit spending since 2001, the last year there was a budget surplus. 

It is one debt that, unlike student debt or medical debt, is unlikely to be forgiven, though inflation and weak dollar policies mean that if it is repaid, it may be in dollars that are worth less than the ones in which the debt was accumulated.