Proposition 209 would ease the stress on patients with overdue medical bills — a leading cause of consumer complaints — so they can keep their jobs and homes and eventually pay off their debts, the funders say. But critics say the measure will affect all debts and reward those who don’t pay their bills while penalizing those who do. (File photo by Megan Bridgeman/Cronkite News)
WASHINGTON — Rodd McLeod said he’s not trying to give anyone a free pass on their debts — he just wanted to give vulnerable debtors some breathing room to help them stay home and get out of poverty .
That’s why he supports Proposition 209, a ballot measure that would increase protections for Arizona residents who face potential wage or asset garnishments due to unpaid debt.
“Our bill does not forgive anyone’s debt,” said McLeod, spokesperson for Healthcare Rising Arizona. “People will still have to pay back the money they owe, but it protects families, so when they’re in debt, they’re still able to keep a home, a job, and earn a living in order to to be able to pay their debt. debts.”
But critics say the proposal, while well-intentioned, will backfire, rewarding people who don’t pay their bills and punishing those who do, making it less likely everyone will get loans when they need them. .
“The long-term implications of this are that it’s going to make everything more expensive,” Arizona Free Enterprise Club President Scot Mussi said. “It will create inflation on goods, and it will create inflation on the cost of credit and the accessibility of credit.”
Tucson Metro Chamber President and CEO Michael Guymon was more blunt.
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“This proposal is extremely bad for the state, extremely bad for business and, quite frankly, it would be bad for low-income people for their ability to ultimately get a loan,” Guymon said.
Proposition 209 would enact the Protection from Predatory Debt Collections Act. It targets medical debts but could affect all debts. If approved by voters, it would reduce the interest creditors can charge on medical debt from the current 10% to 3%.
The measure would also increase the value of homes, cars and bank accounts that are protected from debt collectors, while lowering the amount of a person’s disposable income that can be seized to settle a debt, from the current 25% to 10%.
Overdue medical bills are the most common reason for collection agent calls, according to a 2022 report on medical debt from the Consumer Finance Protection Bureau. Medical bills are “simply spiraling out of control,” McLeod said, adding that they are responsible for two-thirds of personal bankruptcies.
“Look, we don’t think anyone should lose their home or their vehicle to an unpaid medical bill,” McLeod said.
His organization and others, including the Southern California-based United Healthcare Workers West union, collected more than 522,000 signatures over the past 18 months and submitted about 470,000 in July to put the measure on the Arizona poll this fall.
McLeod said proponents of the proposal “don’t think Arizona is terribly divided on this issue” and are “cautiously optimistic” the measure will pass.
But Guymon calls the measure “completely misleading”, saying most people don’t know it will apply to all debt collections, not just medical debts. He said opponents believe the issue would be best resolved by the Legislative Assembly.
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Besides the Tucson Chamber, opponents include the Arizona Free Enterprise Club, the Arizona Chamber of Commerce and Industry, the Arizona Bankers Association, the Phoenix Chamber of Commerce, and the Goldwater Institute.
Guymon acknowledged “that predatory debt is real, that there are companies that prey on, you know, individuals and put them in situations that are very difficult for them to get out of, but this proposition is not the way to solve this problem”.
Will Humble, president of the Arizona Public Health Association, said the proposal will help keep people in their homes and allow them to keep the cars they need to work, although it won’t reduce the long-term level of predatory lending.
Lending “will always be as predatory as it is today,” he said. “But it will help with medical debt.”
He said the restrictions on overall debt collection in the proposal would only bring Arizona in line with most other states. One of the most important parts of the effort, he said, is the limit on “the amount of wages that can be garnished so that they stop before people fall into poverty and allow them to retain more disposable income”.
Despite concerns from business groups, Ralph Atchue, chairman of the Casa Grande Democrats, said he had heard no opposition to the proposal.
“Anything that protects working families, low-income families, I’m 100% for, like most Democrats,” Atchue said. “It’s part of our core values, and what we always support and will continue to support.”
McLeod is hopeful, noting that opponents “spent a lot of money trying to stop us from voting” but that has since diminished.
“Yeah, they don’t spend money on TV commercials against us.” he said. “And that tells me they think it’s going to pass too.”
