Individual states in the United States can significantly shape key health care areas through policy.

In early 2024, a KKF analysis indicated that Americans collectively held around $220 billion in medical debt.

North Carolina has one of the highest percentages of adults facing medical debt, at 13.4 percent. On July 1, 2024, North Carolina Governor Roy Cooper and the North Carolina Department of Health and Human Services (NCDHHS) announced plans for a new medical debt reduction program. Leveraging existing Medicaid measures, Governor Cooper and State Department of Health and Human Services Secretary Kody Kinsley discussed an innovative program for mitigating thousands of dollars in medical debt for low-income residents.

Under the Healthcare Access and Stabilization Program (HASP), established during the Medicaid expansion, the plan allows North Carolina hospitals to receive a different upgraded payment to decrease medical debt after treatment. All 99 eligible North Carolina hospitals, including some of the state’s largest health systems, agreed to participate. With an estimated total impact of relieving over $4 billion of medical debt and serving more than 2 million low and middle-income residents, participating hospitals are eligible to receive higher amounts of Medicaid reimbursement. On July 26, the Centers for Medicare and Medicaid Services (CMS) approved the state’s relief measures and eligibility guidelines.

Aneesh Chopra, who previously served as the first chief technology officer of the United States and the author of Innovative State: How New Technologies Can Transform Government, stated, “The scourge of medical debt needs to be tackled at its root cause – the inability of our social safety net to use all publicly available resources to screen everyone for charity care, Medicaid and ACA tax credits. In the age of real-time access to almost anything, it is sad that so many families with medical debt never knew they qualified for services that would have dramatically lowered that burden. I’m grateful Governor Cooper and his team (Secretary Kinsley) negotiated an agreement with all hospitals to both wipe the current debt burden and put in place accountability for preventing that debt in the first place.”

Further, according to Dr. Nirav Shah, MD, MPH, Senior Scholar at Stanford University and former New York State Health Commissioner, “Secretary Kinsley’s medical debt relief program is an example of state-led innovation at its best. While many forces conspired to make medical debt the #1 cause of bankruptcy in America, North Carolina’s thoughtful approach realigns incentives to resolve the existing crisis and models best practices for the rest of America to follow.”

Illinois has also implemented comparable regulatory measures concerning other areas of health care.

On July 10, 2024, Illinois became the first state to ban prior authorization for emergency mental health treatment.

In a landmark law, JB Pritzker, the Governor of Illinois, signed H.B. 5395, which limits health insurance companies from needing to implement “step therapy” processes in Illinois. According to the National Organization for Rare Disorders (NORD), “step therapy” requires patients to document unsuccessful alternative treatments before accessing prescription medicine from their physician. Insurers are also required to disclose treatments that require prior authorization readily. Patients can compare insurance coverage plans more easily.

Another critical aspect of Illinois H.B. 5395 requires health insurance companies to maintain and update in-network directories of doctors and specialists. The directories allow new patients to access in-network doctors and specialists who are currently available, have not stopped practicing, or have gone out of network. The bill outlines stricter network and transparency standards that can help connect patients more readily to in-network providers.

Governor Pritzker’s regulation effectively addresses the ongoing struggle between insurance companies and doctors. However, more significant change remains crucial for lasting improvement.

These state initiatives emphasize that health care reform can be shaped locally. By implementing innovative policies to address significant challenges in health care, such as medical debt and insurance transparency, individual states are transforming the health care sector positively. Furthermore, these measures highlight the potential for comprehensive solutions to be achieved by fostering collaboration to develop impactful health care policies. Although substantial progress is being made, ongoing innovation remains essential to enhancing the accessibility of health care for all Americans.

Similar to North Carolina and Illinois, other states in the United States can make significant strides in addressing health care challenges through impactful policies.

Ruhi Saldanha is an undergraduate student.