Interest rates on medical debt will soon be limited in Arizona


Soraya Marashi


Proposition 209, a measure to limit interest rates on debt from healthcare services in Arizona, won the approval of voters in the midterm elections. 


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The measure passed with a 72% majority, with 1,747,362 voters voting to pass the measure and 679,089 voters voting to reject it.

The ballot measure will set a limit on interest rates for debt accrued from receiving healthcare services equal to either the weekly average one-year constant maturity yield or 3%, whichever is less. This will lower the maximum interest rate on such debt from 10%. 

The measure will also increase the amount of value for certain property (including a home, household items, motor vehicles, and bank account funds) and earnings exempt from all debt collection beginning in 2024.

According to a policy paper published by the Grand Canyon Institute, 30% of people with a credit file have debt in collections in Arizona, and 16% of Arizonans with a credit file have medical debt in collections. 

The paper also states that a legal imbalance is created in the civil court system in these situations due to debtors almost never having legal representation, while creditors do. 

“The protections in the Predatory Debt Collection Protection Act will provide greater protections for the issues raised above, bringing Arizona much more in line with the recommendations provided by the National Consumer Law Center to enable those in debt to pay off what they owe without placing them in a position where their ability to meet their daily living needs are not impacted by the loss of housing, transportation, or other resources,” the paper reads.

Healthcare Rising Arizona, a major supporting advocacy organization, voiced its excitement about Proposition 209’s victory in a statement. 

“After talking to voters and hearing from families struggling with medical debt across the state, we felt confident there was strong support for this measure,” Healthcare Rising Arizona member Liz Gorski said. “It’s a relief for ordinary Arizonans who are suffering from medical debt. Capping the interest rate on medical debt at 3 percent and protecting people’s homes and vehicles from predatory debt collectors will reduce the pressure on people burdened by medical debt.”

Critics of the measure, including Danny Seiden, president and CEO of the Arizona Chamber of Commerce and Industry, claim that its broad language will make it difficult for lenders to be repaid. 

If you’re somebody in Arizona who makes under $50,000 a year—which is over half of our population—this would essentially make you untouchable by creditors. That might sound great, but what it really means is that nobody will lend to you if there’s no way to ensure they’ll get their money back,” he said about the measure before November 8th.

The proposition’s opponents also argue that it will impact Arizonans with smaller debt amounts more than those with larger amounts, who are primarily people of color, underrepresented minorities, and Arizonans in rural areas where incomes are generally lower.