Oregon lawmakers are considering weakening a key guardrail established to protect low-income patients from becoming ensnared in debt.
Currently, tax-exempt hospitals must screen patients for charity care eligibility if they are uninsured, enrolled in Medicaid or owe more than $500 after insurance. A seemingly small provision in House Bill 4040, a sprawling health care bill before lawmakers, would increase that amount to $1,500 for a single hospital visit.
Lawmakers are considering lessening the protections — the most recent of which took effect in 2024 — after Oregon hospitals complained they are having to screen too many patients to determine if their incomes are low enough to qualify for help paying their bills.
Hospitals also seek the change after years of shaky finances and as they brace for deep cuts in federal health spending under the Trump administration. While the amount may seem small, it would almost certainly result in more patients owing money for medical care, just as Oregon’s latest hospital financial figures show the protections are producing results.
Without automatic screening, patients with up to $1,500 in medical debt would have to seek out and apply for relief on their own. Eli Rushbanks, general counsel and policy director for medical debt relief group Dollar For, said the proposed change would send hospitals again chasing after low-income people for money many can’t pay.
“We have this extremely effective public health policy,” Rushbanks said. “And if we tweak it, it will only mean it’s less effective.”
Oregon expanded hospitals’ screening criteria for charity care in response to reports of low-income patients ending up in debt for care that should have been free under existing law. Rushbanks pointed to state data showing hospitals have generally seen less bad debt from patients unable to pay their bills after the expanded screening criteria took effect in July 2024.
The figures show Oregon’s urban hospitals’ bad debt totaled $45.4 million in the second quarter of 2025, a decrease of more than half from the beginning of 2024. That category of hospitals also increased their spending on charity care from roughly $100 million to $182 million while also seeing steady gains in patient revenue during the same time frame.
State data also tells a different story for Oregon’s rural hospitals. That category of hospitals have seen their overall bad debt increase by more than $1 million to $4.3 million during the same time frame. Their charity care spending also increased by roughly 50% to $9 million.
Sean Kolmer, Hospital Association of Oregon lobbyist, told lawmakers that screening software, including Experian and Waystar, has been unexpectedly unreliable in determining whether a patient qualifies for charity care. The legislation would focus hospitals’ efforts on screening patients with larger bills, he wrote in testimony to the Legislature.
“Oregon’s presumptive eligibility law, which the hospital association supported, increased the administrative burden on the hospital workforce and placed substantial pressure on Oregon’s health care system, which is under considerable strain,” Kolmer wrote.
A coalition of a dozen organizations, including AARP Oregon, the Oregon Health Equity Alliance and patient advocacy groups, submitted written testimony opposing the change to the screening criteria. They argued that patients with high or unexpected medical expenses should have a streamlined way to access free or discounted care to avoid debt.
Jane Leo, lobbyist for the American Cancer Society Cancer Action Network, submitted additional testimony that cited research on how cancer patients are likely to be financially burdened to pay for their treatment.
Adam Zarrin, a lobbyist for Blood Cancer United, also wrote in testimony that hospital financial aid is critical for patients with chronic illnesses.
“A patient with high or unexpected medical expenses who meets the income eligibility criteria for charity care must have a clear and expedited path to free or discounted care,” he wrote.
State Rep. Rob Nosse, a Portland Democrat who chairs the House Health Care Committee, said hospitals are having to screen more patients with high-deductible health insurance plans, and the bill is intended to lighten their administrative burden. In particular, he said the bill is intended to make charity care more manageable for struggling rural hospitals.
Nosse said a central focus of lawmakers’ work during the 35-day legislative session is responding to federal spending cuts included in the sweeping fiscal policy bill passed by the GOP-led Congress last year. State officials expect Oregon to see a cut of more than $11 billion in federal Medicaid funding for the Oregon Health Plan over the next five years. The state’s current two-year budget includes $27.4 billion for Medicaid, which covers about a third of Oregonians and has high enrollment in rural areas.
“Things are going to get tougher,” Nosse said.
Margins and screens
Federal law broadly requires tax-exempt hospitals to have financial assistance policies that cover patients eligible for free or discounted care. States have adopted additional requirements to ensure that low-income patients actually benefit from those policies.
Oregon lawmakers passed a landmark law in 2019 that set minimum spending levels on community benefits for tax-exempt hospitals, while directing them to cover the costs of low-income patients.
But reports of hospitals aggressively pursuing payment from low-income patients emerged despite the new protections. That led lawmakers to adopt new protections in 2023, including for hospitals to automatically screen patients for charity care eligibility if they met certain criteria.
The new protections were meant to keep eligible patients, who are often unaware they could get free care, from slipping through hospital bureaucracy. Rushbanks said the protection is unique from other states and is benefiting hospitals and patients.
“We know that screening patients gets charity care up and bad debt down,” he said.
Hospitals aren’t losing a meaningful source of revenue from being unable to pursue patients for bills many likely couldn’t pay anyway, Rushbanks said. He pointed to state data showing hospital revenue has steadily risen even as the protections took effect.
However, the same data shows that revenue hasn’t always covered their costs, and hospitals have hovered above breaking even in recent years.
During a hearing on the bill Thursday, state Rep. Ed Diehl, R-Scio, said the new screening criteria have been a “significant hit” for hospitals, and have negatively affected their profit margins.
“And some of these hospitals are on the edge,” he said.
Oregon’s rural areas have some of the state’s highest proportions of patients covered by Medicaid, which pays less than commercial insurance, and some have reduced services in recent years. Of Oregon’s 37 rural hospitals, 14 ended 2024 with negative operating margins and saw a combined $93 million net financial loss, according to the state’s application for a new federal rural health program.
The path to care
It’s not clear what the average out-of-pocket cost for hospital care is in Oregon, according to Rushbanks. But hospitals are a significant source of medical debt in Oregon.
Nearly a third of Oregonians have taken on medical debt within the last two years, according to a 2024 survey by public opinion research nonprofit Oregon Values and Beliefs Center. Hospitals were an outsized source of debt, with 41% saying it was the main contributor, according to the survey conducted on behalf of advocacy group Oregon Consumer Justice.
A state report on health care costs found that nearly a quarter of Oregonians who had trouble paying medical debt said it came from a bill for a diagnostic test like an X-ray or CAT scan. Another 12% said their bill was for emergency room care and another 4% said it was for hospital care.
More than half of Oregonians with medical debt owe less than $2,000, the report found.
Raising the screening threshold to $1,500 for a single hospital visit could mean it wouldn’t apply to a patient with a $1,200 copay, Rushbanks said. Additionally, if a patient received a $2,500 bill for multiple visits, they would not be screened and would be at risk of falling through the cracks.
Kolmer wrote in his testimony that patients can still apply for financial assistance regardless of what they owe. Patients with incomes of up to 400% of the federal poverty level qualify for some assistance. That pencils out to $63,840 a year for an individual and $132,000 a year for a family of four.
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This article appears in February 11, 2026.