New York Gov. Kathy Hochul recently signed legislation that will end the use of home liens and wage garnishments in medical-debt collection.
The measure amended the civil practice law and rules to prohibit home liens on an individual's primary residence or garnishing wages to collect on medical debt. It takes effect immediately.
The new state law comes after USA TODAY Network reported how dozens of hospitals in New York imposed a total of 4,880 liens on the homes of their patients with outstanding medical bills in recent years.
“No one should face the threat of losing their home or falling into further debt after seeking medical care," Hochul said in a statement.
How many New Yorkers sued for medical debt?
More than 50,000 New Yorkers have been sued for medical debt over the past five years, and nearly half of American adults struggle to afford health care costs, according to statistics provided by the governor’s office.
Many of the home liens in New York have targeted patients in communities across upstate, spanning the Southern Tier, Hudson Valley, Finger Lakes and Mohawk Valley.
Some of the highest per capita rates of hospitals filing liens unfolded in small rural communities relying on a single hospital, including in the counties of Madison, Schuyler and Fulton, according to a 2021 study by the Community Service Society.
Some of the cities with the highest rates of liens included Poughkeepsie, Binghamton and Kingston.Communities of color in New York are almost twice as likely to have medical debt than their white counterparts, state records show.
Nationally, nearly 1 in 10 adults (9%) – or roughly 23 million people – owe medical debt. This includes 11 million who owe more than $2,000 and 3 million people who owe more than $10,000, a Kaiser Family Foundation analysis found.
How bad is medical debt in NY?
About 8% of New Yorkers, or 1.6 million people, have delinquent medical debt that appears on their credit reports, state records show.
The problem is most pervasive upstate. For example, in Oswego County, that same rate increases to 23% of residents and there are 16 other upstate counties where between 16% and 23% of residents have an adverse credit entry for delinquent medical debt.
Meanwhile, the state provides its hospitals, which are tax-exempt nonprofits by law, with about $1.1 billion per year to support uncompensated care for poor New Yorkers.
While most hospitals do not sue their patients, a significant minority do sue their patients for relatively small amounts, state lawmakers noted in pushing for the ban on liens and wage garnishments. The median home lien court case is for $1,900 dollars.
“These cases do little to stabilize a hospital's finances, but can have devastating financial consequences for the patient,” lawmakers added.
Previously, two hospitals in 2021 ended the practice of imposing home liens in response to USA TODAY Network New York questions about the issue.
Now, all hospitals will join these two hospitals in ending the practice that harmed thousands of New Yorkers.
This article originally appeared on New York State Team: NY ends home liens, wage garnishment in medical-debt collection