ALBANY - Amid high inflation, Gov. Kathy Hochul signed four new bills into law Wednesday that aim to prevent medical price-gouging and curb predatory subscription services.
Of the two bills related to medical debt, the first prohibits drug companies from raising the cost of drugs during a shortage declared by the U.S. Food and Drug Administration by an “unconscionably excessive price.” The second prohibits health care professionals and ambulances from reporting one’s medical debt charged to a medical card to credit agencies. A medical card is a credit card offered by providers to pay for health care services and products.
Speaking in New York City, Hochul said there are currently 340,000 New Yorkers struggling with medical debt.
“And the stress that this causes for people — you think about a mother sitting in a parking lot, deciding whether she should take her child into an emergency room or not. Is she going to be able to pay for this? Is she going to be straddled with debt? The level of stress this causes, think about an elderly citizen who's taking their prescription drugs, opens up the bottle, empties it on the table, and cuts the pill in half to make sure it can last,” Hochul said. “This is what people are doing, not in other countries, but this is happening in America today. And that's what we're fighting here against.”
According to the U.S. Department of Health and Human Services, more than 4,200 drug products had price increases in 2022, of which 46% were larger than the rate of inflation. The average drug price increase was 15.2%, or $590 per drug. For example, the highest increase was for a drug approved to treat high blood pressure. The price last year was increased more than 35-fold, from a list price of $4.32 to $158.72. Nationwide, nearly one in 10 adults, or 12 million, owe medical debt, with 3 million people owing more than $10,000.
AARP New York State Director Beth Finkel said medical debt can prevent residents from buying homes, getting loans or saving for retirement.
“No one should risk putting their financial future in jeopardy by getting the medical care they need, and AARP New York applauds Governor Hochul for signing this bill,” Finkel said in a statement. “Prohibiting medical providers from sending medical debt to credit reporting agencies will especially help older New Yorkers, whose income often decreases while their medical expenses increase — and whose numbers are growing fast. Plus, older Black and Hispanic/Latino families face much higher debt burdens than older white families.”
Tracking subscription fees
The other two bills relate to predatory subscription services. The first requires companies to notify customers of automatic subscription renews and provide clear instructions on how to cancel. The other requires companies to post the highest price a consumer might pay for a subscription, regardless of payment methods.
“They're not as egregious as the medical debt, but over time, it just keeps adding up and up. And they found out, a study that was done by Chase Bank found, that 71% of Americans waste over $50 a month on unwanted subscription fees that you may have signed up for, may have been a promotion,” Hochul said. “Say, oh, for a dollar a year, you can get this subscription, and all of a sudden, you're paying 300 a year after that. It happens all the time. It happens to everyone. And two-thirds forget a recurring payment, guess what, they're going into debt as well. We've seen it. You see that random charge on your credit card?”
Companies that fail to clearly post the highest price a consumer may pay, including surcharges, could face a fine of up to $500 per violation. Companies will also now be required to notify consumers of an upcoming automatic renewal 45 days before the charge and the notification must include instructions on how to cancel the subscription. Hochul used trying to cancel a Disney+ subscription as an example.
“I want the trial to end, but they make it so hard, right? It's intentionally designed to be hard, so the money keeps going to them and out of your pockets,” the Democrat said. “The automatic renewal has to stop, and they have to notify you, we're saying, OK, how about letting people know before, when it's a 10-day free trial and all of a sudden you're paying $51 for three months and then it keeps going up and then an automatic renewal is now $73 a month.”