674 buildings, spread across 251 licensed hospitals — do not meet standards that require hospitals to remain functional in the event of a major earthquake.

This article was published on Tuesday, October 15, 2025 in KFF Health News.

By Annie Sciacca

More than half of the 410 hospitals in California have at least one building that likely wouldn't be able to operate after a major earthquake hit their region, and with many institutions claiming they don't have the money to meet a 2030 legal deadline for earthquake retrofits, the state is now granting relief to some while ramping up pressure on others to get the work done.

Gov. Gavin Newsom in September vetoed legislation championed by the California Hospital Association that would have allowed all hospitals to apply for an extension of the deadline for up to five years. Instead, the Democratic governor signed a more narrowly tailored bill that allows small, rural, or "distressed" hospitals to get an extension of up to three years.

"It's an expensive thing and a complicated thing for hospitals — independent hospitals in particular," said Elizabeth Mahler, an associate chief medical officer for Alameda Health System, which serves Northern California's East Bay and is undertaking a $25 million retrofit of its hospital in Alameda, on an island beside Oakland.

The debate over how seismically safe California hospitals should be dates to the 1971 Sylmar quake near Los Angeles, which prompted a law requiring new hospitals to be built to withstand an earthquake and continue operating. In 1994, after the magnitude 6.7 Northridge quake killed at least 57 people, lawmakers required existing facilities to be upgraded.

The two laws have left California hospitals with two sets of standards to meet. The first — which originally had a deadline of 2008 but was pushed to 2020 — required hospital buildings to stay standing after an earthquake. About 20 facilities have yet to meet that requirement for at least one of their buildings, although some have received extensions from the state.

Many more — 674 buildings, spread across 251 licensed hospitals — do not meet the second set of standards, which require hospital facilities to remain functional in the event of a major earthquake. That work is supposed to be done by 2030.

"The importance of it is hard to argue with," said Jonathan Stewart, a professor at UCLA's Samueli School of Engineering, citing a 2023 earthquake in Turkey that damaged or destroyed multiple hospitals. "There were a number of hospitals that were intact but not usable. That's better than a collapsed structure. But still not what you need at a time of emergency like that."

The influential hospital industry has unsuccessfully lobbied lawmakers for years to extend the 2030 deadline, though the state has granted various extensions to specific facilities. Newsom's signature on one of the three bills addressing the issue this year represents a partial victory for the industry.

Hospital administrators have long complained about the steep cost of seismic retrofits.

"While hospitals are working to meet these requirements, many will simply not make the 2030 deadline and be forced by state law to close," wrote Carmela Coyle, president and CEO of the California Hospital Association, in a letter to Newsom before he vetoed the CHA bill. A 2019 Rand Corp. study paid for by the CHA pinned the price of meeting the 2030 standards at between $34 billion and $143 billion statewide.

Labor unions representing nurses and other medical workers, however, say the hospitals have had plenty of time to get their buildings into compliance, and that most have the money to do so.

"They've had 30 years to do this," Cathy Kennedy, a nurse in Roseville and one of the presidents of the California Nurses Association, said in an interview prior to the governor's action. "We are kicking the can down the road year after year, and unfortunately, lives are going to be lost."

In his veto message on the CHA bill, Newsom wrote that a blanket five-year extension wasn't justified, and that any extension "should be limited in scope, granted only on a case-by-case basis to hospitals with demonstrated need and a clear path to compliance, and in combination with strong accountability and enforcement mechanisms."

He also vetoed a bill directed specifically at helping several hospitals operated by Providence, a Catholic hospital chain.

But he signed a third bill, which allows small, rural, and "critical access" hospitals, and some others, to apply for a three-year extension, and directs the Department of Health Care Access and Information to offer them "technical assistance" in meeting the deadline.

The state designates 37 hospitals as providing "critical access," while 56 are considered "small," meaning they have fewer than 50 beds, 59 are considered "rural," and 32 are "district" hospitals, meaning they are funded by special government entities called "health care districts." They can seek a three-year extension as long as they submit a seismic compliance plan and identify milestones for implementing it.

Debi Stebbins, executive director of the Alameda Health Care District, which owns the Alameda Hospital buildings, said small hospitals face a big challenge. Even though Alameda is very close to San Francisco and Oakland, the tunnels, bridges, and ferries that connect it to the mainland could easily be shut in an emergency, making the island's hospital a lifeline.

"It's an unfunded mandate," Stebbins said of the state's 2030 deadline.

The Rand study estimated the average cost of a retrofit at more than $92 million per building, but the amount could vary greatly depending on whether it's a building that houses hospital beds.

Small and rural hospitals can get some aid from the state via grants financed by the California Electronic Cigarette Excise Tax, but HCAI spokesperson Andrew DiLuccia said it would yield just $2-3 million total annually. He added that the Small and Rural Hospital Relief Program has also received a one-time infusion of $50 million from a tax on health insurers to help with the seismic work.

Labor unions and critics of the extensions often point to the large profits that some hospitals reap: A California Health Care Foundation report published in August found that California's hospitals made $3.2 billion in profit during the first quarter of 2024. The study notes that there "continues to be wide variation in financial performance among hospitals, with the bottom quartile showing a net income margin of -5%, compared to +13% for the top quartile."

Stebbins has had to help her district figure out a plan.

After Newsom vetoed a bill in 2022 that would have granted an extension on the seismic retrofit deadline specifically for Alameda Hospital, the hospital system and its partner health care district used parcel tax money to help back a loan.

The cost to retrofit will be about $25 million, and the system is also investing millions more into other projects, such as a new skilled nursing facility. The construction work is set to be completed in 2027.

"No one wants things crashing in an earthquake or anything else, but at the same time, it's a burden," Mahler, the Alameda Health System associate chief medical officer, said. "How do we make sure that they get what they need to stay open?"

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

Annie Sciacca: @AnnieSciacca

The plans allow employers to make tax-preferred contributions to employees to use to buy coverage on the individual market.

This article was published on Wednesday, October 2, 2024 in KFF Health News.

By Michelle Andrews

Dave Lantz is no stranger to emergency department or doctor bills. With three kids in their teens and early 20s, "when someone gets sick or breaks an arm, all of a sudden you have thousand-dollar medical bills," Lantz said.

The family's health plan that he used to get as the assistant director of physical plant at Lycoming College, a small liberal arts school in central Pennsylvania, didn't start to cover their costs until they had paid $5,600 in medical bills. The Lantzes were on the hook up to that annual threshold. The high-deductible plan wasn't ideal for the family of five, but it was the only coverage option available to them.

Things are very different now. In mid-2022, the college ditched its group health plan and replaced it with a new type of plan — an individual coverage health reimbursement arrangement, or ICHRA.

Now Lantz gets a set amount from his employer every month that he puts toward a family plan on the individual insurance market. He opted for a zero-deductible plan with a richer level of coverage than the group plan. Though its $790 monthly premium is higher than the $411 he used to pay, he ends up saving money overall by not having to pay down that big deductible. Plus, he now has more control over his health spending.

"It's nice to have the choice to balance the high deductible versus the higher premium," Lantz said. Before, "it was tough to budget for that deductible."

As health insurance costs continue to rise, employers are eyeing this type of health reimbursement arrangement to control their health care spending while still providing a benefit that workers value. Some consumer advocates are concerned the plans could result in skimpier, pricier coverage for certain consumers, especially sicker, older ones.

The plans allow employers to make tax-preferred contributions to employees to use to buy coverage on the individual market. Employers thus limit their financial exposure to rising health care costs. Everybody wins, say backers of the plans, which were established in 2019 as part of a group of proposals the Trump administration said would increase health insurance choice and competition.

"It's a way to offer coverage to more diverse employee groups than ever before and set a budget that controls costs for the companies," said Robin Paoli, executive director of the HRA Council, an advocacy group.

Some health insurance specialists say the plans aren't necessarily a good option for consumers or the individual insurance market. Even though the rules prevent employers from offering this type of coverage to specific workers who may be sicker and more expensive to cover than others, employers with relatively unhealthy workforces may find the arrangements appealing. This, in turn, may drive up premiums in the individual market, according to an analysis by the University of Southern California-Brookings Schaeffer Initiative for Health Policy.

Plans sold on the individual market often have smaller provider networks and higher deductibles than employer-sponsored coverage. Premiums are often higher than for comparable group coverage. Workers, especially lower-wage ones, might be better off financially with premium tax credits and cost-sharing reductions to buy an Affordable Care Act marketplace plan, but using the work-based ICHRA benefit would disqualify them.

"From a worker perspective, the largest impact is that being offered affordable coverage by your employer makes you ineligible for marketplace subsidies," said Matthew Fiedler, a senior fellow at the Brookings Institution who co-authored the analysis of the rule establishing the plans.

The plans are currently offered to only a tiny slice of workers: an estimated 500,000 of the roughly 165 million people with employer-sponsored coverage, according to the HRA Council. But interest is growing. The number of employers offering ICHRAs and an earlier type of plan, called qualified small-employer HRAs, increased 29% from 2023 to 2024, according to the council. And, although small employers have made up the bulk of adopters to date, larger employers with at least 50 workers are the fastest-growing cohort.

Individual market insurers like Oscar Health and Centene see opportunities to expand their footprint through the plans. Some venture capitalists are touting them as well.

"The [traditional group] health insurance cornerstone from 60 years ago has outlived its usefulness," said Matt Miller, whose Headwater Ventures has invested in the ICHRA administrator Venteur. "The goal is to ensure people have coverage, detaching it from the employment construct and making it portable."

Employers can offer this type of health reimbursement arrangement to some classes of employees and group plans to others based on characteristics such as geography, full-time vs. part-time status, or salaried vs. hourly pay.

Lycoming College wasn't aiming to be on the cutting edge when it made this coverage switch. Faced with a 60% premium increase after some members had high claims, the school, which covers roughly 400 faculty and staff and their family members, needed to look at alternatives, said Kacy Hagan, its associate vice president for human resources and compliance.

In the end, they opted to offer ICHRA coverage to any employee who worked at least 30 hours a week.

In the first year of offering the new benefit, the college saved $1.4 million in health care costs over what they would have spent if they'd stayed with its group plan. Employees saved an average of $1,200 each in premiums.

"The finance folks really like it," Hagan said. As for employees, "from a cost standpoint, people tend to be pretty happy with it, and people really like having a choice of plans," she said. However, there have been issues with the plan's administration. Some employees' coverage was dropped and had to be reinstated, she said. Those problems have been largely resolved since they switched plan administrators this year.

This coverage arrangement can be complicated to manage. Instead of a company paying one group health plan premium, dozens of individual health insurers may need to be paid. And employees who've never shopped for a plan before need help figuring out what coverage works for them and signing up.

The complexity can be off-putting. This year, a number of companies that have tried this type of health reimbursement arrangement decided they'd rather go back to a group plan, said Tim Hebert, managing partner of Sage Benefit Advisors, based in Fort Collins, Colorado.

"They say, 'Employees are all over the place in different plans, and they don't feel like they're being taken care of,'" Hebert said.

Vendors continue to crop up to help employers like Lycoming College and their workers manage their plans.

"If you just say, 'Here's $1,000,' it's extremely discombobulating and confusing," said Jack Hooper, CEO of Take Command Health, which now administers the Lycoming ICHRA.

It's unclear whether the plans will take off or remain a niche product.

"It's a big disrupter, like 401(k)s," said Mark Mixer, board chair of the HRA Council and CEO of HealthOne Alliance in Dalton, Georgia. Still, it's not for everyone. "It's simply another tool that employers should consider. When it fits, do it."

Michelle Andrews: andrews.khn@gmail.com, @mandrews110

There is no official tally of new hospitals being built in rural America, but industry experts say they're rare.

This article was published on Friday, September 27, 2024 in KFF Health News.

By Sarah Jane Tribble 

There's a new morning ritual in Pinedale, Wyoming, a town of about 2,000 nestled against the Wind River Mountains.

Friends and neighbors in the oil- and gas-rich community "take their morning coffee and pull up" to watch workers building the county's first hospital, said Kari DeWitt, the project's public relations director.

"I think it's just gratitude," DeWitt said.

Sublette County is the only one in Wyoming — where counties span thousands of square miles — without a hospital. The 10-bed, 40,000-square-foot hospital, with a similarly sized attached long-term care facility, is slated to open by the summer of 2025.

DeWitt, who also is executive director of the Sublette County Health Foundation, has an office at the town's health clinic with a window view of the construction.

Pinedale's residents have good reason to be excited. New full-service hospitals with inpatient beds are rare in rural America, where declining population has spurred decades of downsizing and closures. Yet, a few communities in Wyoming and others in Kansas and Georgia are defying the trend.

"To be honest with you, it even seems strange to me," said Wyoming Hospital Association President Eric Boley. Small rural "hospitals are really struggling all across the country," he said.

There is no official tally of new hospitals being built in rural America, but industry experts such as Boley said they're rare. Typically, health-related construction projects in rural areas are for smaller urgent care centers or stand-alone emergency facilities or are replacements for old hospitals.

About half of rural hospitals lost money in the prior year, according to Chartis, a health analytics and consulting firm. And nearly 150 rural hospitals have closed or converted to smaller operations since 2010, according to data collected by the University of North Carolina's Cecil G. Sheps Center for Health Services Research.

To stem the tide of closures, Congress created a new rural emergency hospital designation that allowed struggling hospitals to close their inpatient units and provide only outpatient and emergency services. Since January 2023, when the program took effect, 32 of the more than 1,700 eligible rural hospitals — from Georgia to New Mexico — have joined the program, according to data from the Centers for Medicare & Medicaid Services.

Tony Breitlow is healthcare studio director for EUA, which has extensive experience working for rural healthcare systems. Breitlow said his national architecture and engineering firm's work expands, replaces, or revamps older buildings, many of which were constructed during the middle of the last century.

The work, Breitlow said, is part of healthcare "systems figuring out how to remain robust and viable."

Freeman Health System, based in Joplin, Missouri, announced plans last year to build a new 50-bed hospital across the state line in Kansas. Paula Baker, Freeman's president and chief executive, said the system is building for patients in the southeastern corner of the state who travel 45 minutes or more to its bigger Joplin facilities for care.

Freeman's new hospital, with construction on the building expected to begin in the spring, will be less than 10 miles away from an older, 64-bed hospital that has existed for decades. Kansas is one of more than a dozen states with no "certificate of need" law that would require health providers to obtain approval from the state before offering new services or building or expanding facilities.

Baker also said Freeman plans to operate emergency services and a small 10-bed outpost in Fort Scott, Kansas, opening early next year in a corner of a hospital that closed in late 2018. Residents there "cried, they cheered, they hugged me," Baker said, adding that the "level of appreciation and gratitude that they felt and they displayed was overwhelming to me."

Michael Topchik, executive director of the Chartis Center for Rural Health, said regional healthcare systems in the Upper Midwest have been particularly active in competing for patients by, among other things, building new hospitals.

And while private corporate money can drive construction, many rural hospital projects tap government programs, especially those supported by the U.S. Department of Agriculture, Topchik said. That, he said, "surprises a lot of people."

Since 2021, the USDA's rural Community Facilities Programs have awarded $2.24 billion in loans and grants to 68 rural hospitals for work that was not related to an emergency or disaster, according to data analyzed by KFF Health News and confirmed by the agency. The federal program is funded through what is often known as the farm bill, which faces a September congressional renewal deadline.

Nearly all the projects are replacements or expansions and updates of older facilities.

The USDA confirmed that three new or planned Wyoming hospitals received federal funding. Hospital projects in Riverton and Saratoga received loans of $37.2 million and $18.3 million, respectively. Pinedale's hospital received a $29.2 million loan from the agency.

Wyoming's new construction is rare in a state where more than 80% of rural hospitals reported losses in the third quarter of 2023, according to Chartis. The state association's Boley said he worries about several hospitals that have less than 10 days' cash on hand "day and night."

Pinedale's project loan was approved after the community submitted a feasibility study to the USDA that included local clinics and a long-term care facility. "It's pretty remote and right up in the mountains," Boley said.

Pinedale's DeWitt said the community was missing key services, such as blood transfusions, which are often necessary when there is a trauma like a car crash or if a pregnant woman faces severe complications. Local ambulances drove 94,000 miles last year, she said.

DeWitt began working to raise support for the new hospital after her own pregnancy-related trauma in 2014. She was bleeding heavily and arrived at the local health clinic believing it operated like a hospital.

"It was shocking to hear, ‘No, we're not a hospital. We can't do blood transfusions. We're just going to have to pray you live for the next 45 minutes,'" DeWitt said.

DeWitt had to be airlifted to Idaho, where she delivered a few minutes after landing. When the hospital financing went on the ballot in 2020, DeWitt — fully recovered, with healthy grade-schoolers at home — began making five calls a night to rally support for a county tax increase to help fund the hospital.

"By improving healthcare, I think we improve everybody's chances of survival. You know, it's pretty basic," DeWitt said.

Sarah Jane Tribble: sjtribble@kff.org, @sjtribble

In exchange for federal Medicaid expansion money, hospitals wiped out billions of dollars of patient debt and adopt new standards to shield patients from crippling bills.

This article was published on Monday, September 23, 2024 in KFF Health News.

By Noam N. Levey and Ames Alexander, Charlotte Observer

North Carolina officials had been quietly laboring for months on an ambitious plan to tackle the state's mammoth medical debt problem when Gov. Roy Cooper stepped before cameras in July to announce the initiative.

But as Cooper stood by the stairs of the executive mansion and called for "freeing people from medical debt," the future of his administration's work hung in the balance.

Negotiations were fraying between the state and the powerful hospital industry over the plan to make hospitals relieve patient debt or lose billions of dollars of public funding tied to the state's Medicaid expansion. The federal government hadn't signed off on North Carolina's plan, putting funding at risk. And not a single hospital official stood with the governor that day.

Less than six weeks later, the gamble paid off. The state received a federal blessing. And every one of North Carolina's 99 hospitals agreed to the state's demands.

In exchange for federal money, hospitals would wipe out billions of dollars of patient debt and adopt new standards to shield patients from crippling bills.

"It's a model that the rest of the country could adopt," said Jared Walker, founder of Dollar For, a national nonprofit that helps patients get financial aid from hospitals. "This is what we've been fighting for."

But it was no sure thing. The behind-the-scenes story of North Carolina's effort — based on hundreds of pages of public records and interviews with state officials and others involved — reveals a months-long struggle as the state went toe-to-toe with its hospitals.

Multibillion-dollar health systems and the industry's powerful trade group vigorously fought the medical debt plan, records show. They sowed fears of collapsing rural health care. They warned of legal fights and a showdown with the legislature. And they maneuvered to get the federal government to kill the plan.

The Cooper administration had powerful allies in Washington, though. The Biden administration — and Vice President Kamala Harris specifically — had made reducing medical debt a priority. And in the end, the state held the highest card: money.

North Carolina's new path was paved by years of frustration.

The state has long had among the highest rates of medical debt in the nation. As many as 3 million adults likely carry such debt, KFF polling and credit bureau data suggest.

Debt is highest in nonwhite communities and in eastern North Carolina, credit bureau data analyzed by the nonprofit Urban Institute shows. And while some debts may be small, the KFF poll found that at least a quarter of people nationally with debt owe more than $5,000.

North Carolina hospitals also have been aggressive debt collectors, taking thousands of patients to court, placing liens on homes, and garnishing tax refunds.

The largest system, Atrium Health — part of Advocate Health, a multistate tax-exempt conglomerate that reported more than $31 billion in revenue and $2.2 billion in profit last year — sued almost 2,500 patients from 2017 to 2022, a report found.

On Thursday, Advocate Health announced that it will cancel the liens it placed on more than 11,000 homes.

Officials from Atrium and 14 other hospital systems declined to be interviewed about the debt plan.

Hospitals have beaten back efforts to restrict their aggressive billing. While an ambitious bill to expand patient protections attracted bipartisan support in the general assembly, it stalled last year in the face of industry opposition.

"Hospitals are good lobbyists," the governor said in a recent interview. "They're able to often stop legislation they don't like."

In 2023 the health care landscape in the state shifted. After years of resistance, GOP leadership in the legislature agreed to expand eligibility for Medicaid, the safety net insurance program.

The expansion promised to make coverage available to hundreds of thousands of previously uninsured low-income residents and to protect them from going into debt.

But as Cooper, a Democrat, and his top health official, Kody Kinsley, traveled the state to celebrate coverage gains, they saw a gap. The expansion didn't help people who'd already racked up big bills. "They were still carrying the burden of that debt," Kinsley said.

With one more year in office, Cooper and Kinsley, whose interest in medical debt was colored by being the child of working-class parents, resolved to take a final shot at the debt problem.

"It's just a metastasized disease in the health system," Kinsley said. "And going after it is just a tangle of thorns."

Medicaid expansion offered a means, albeit untested, to do that, they believed.

The expansion would come with billions of dollars of new federal funding for hospitals through an arcane process known as a state-directed payment. This funding — which many states access to compensate hospitals for treating low-income patients — is criticized by some experts as excessive.

Rather than reject the money, however, Noth Carolina officials believed they could leverage it. Instead of giving it away with no strings attached, they asked, what if they made hospitals protect patients from medical debt in exchange for the funds? If hospitals wouldn't, the state would dock their money.

"It was a clear tool that we now had on the table," said Kinsley, who oversaw development of the debt plan and negotiations with hospitals and the federal government.

Many hospital systems in North Carolina stood to get nearly twice as much money by agreeing to participate in the debt relief plan, state figures show. Charlotte-based Atrium, for instance, would get about $1.7 billion next year, compared with roughly $900 million if it didn't sign on.

But the added money would come with a catch.

Seeking Trusted Partners

Kinsley and his aides quickly settled on two things to demand from health systems.

Hospitals would have to eliminate outstanding debts of their low-income patients. This approach had been pioneered by New York-based nonprofit Undue Medical Debt, which buys old debt for pennies on the dollar and retires it.

Hospitals would also have to change their financial aid policies so more patients could get help with big bills and fewer would go into debt.

Most hospitals already offer discounts to low-income patients. But standards vary, and many hospitals make it difficult to apply for assistance. To address this, some states have imposed uniform standards on hospitals.

North Carolina state officials wanted the same. They knew, however, that threatening hospital money would stir opposition from the industry's lobbying arm, the influential North Carolina Healthcare Association.

So Kinsley and his aides reached out directly to a handful of hospital systems, including UNC Health, the nonprofit system affiliated with the state's public university system. "We were essentially road-testing what the actual policies could be and how they would work," Kinsley said.

Through the first months of 2024, state officials took pains to keep the conversations confidential, emails obtained through a public records request show. When Kinsley's aides provided drafts to hospital officials, they asked that the proposals be shared "with only a few select colleagues."

State and hospital officials went back and forth over which patients should qualify for free or discounted care, how to relieve old patient debts, and how to better screen patients for aid.

The process convinced state officials that their plan would work. Some hospitals had already retired patients' debts. Others had financial assistance policies that paralleled the standards the state was contemplating.

"We had sought out hospitals of different shapes and sizes," Kinsley said. "We had gleaned from other states what the best practices were and what was really workable."

‘A Total Explosion'

Then in late April, word of the negotiations between the state and the select group of hospitals leaked.

Kinsley said his cellphone lit up. "Everybody freaked out," he recalled. "Every lobbyist was coming after me. It was just a total explosion."

Among them was the North Carolina Healthcare Association and its veteran chief executive, Steve Lawler, who began peppering Kinsley's office with sharply worded letters attacking the medical debt plan and predicting dire consequences.

Lawler warned that patients would face higher insurance costs. Moreover, he alleged it was illegal to use federal Medicaid dollars to force hospitals to provide widespread debt relief.

"Such a trade-off is not permissible," Lawler wrote on May 2.

Days later, Kinsley fired back a long letter to Lawler, saying that the plan was a legally sound effort to address a crisis that was "harming our neighbors."

But the damage had been done. The hospitals working with the state changed their tone, and the industry closed ranks.

Meanwhile the hospital association made plans to convene a meeting with health insurers and business leaders to discuss medical debt, an approach that threatened to slow the state effort to hold hospitals singularly accountable. The group met at Ruth's Chris Steak House in Raleigh, a restaurant where a steak costs $60 and up.

In a recent interview, Lawler said the hospital group was just trying to build consensus for a different strategy for tackling medical debt. "This was a big enough issue that it just required a bigger-tent conversation," he said.

To state officials, it looked like an industry play to derail the medical debt plan. "I didn't know if it was going to fall apart," Kinsley said.

Pressing Ahead

For lower-income residents, the stakes were high.

The state's program was designed to erase around $4 billion in hospital debt for nearly 2 million people dating to 2014, according to state estimates.

If approved, the plan would also require hospitals to automatically qualify more patients for charity care, provide discounts to low- and middle-income patients, and stop reporting these patients to credit agencies if they couldn't pay.

So despite the pushback, state officials kept up their dialogue with hospitals and made revisions to address some concerns, records show.

Among the concessions, the state proposed that hospitals offer debt relief to patients with incomes below 3½ times the federal poverty level, or $109,200 for a family of four. The state had initially sought to mandate aid for people making less than four times the poverty level.

State officials also secured a legal opinion from a Medicaid expert in Washington, D.C., who confirmed that the state's approach wouldn't run afoul of federal rules.

But time was running out. The state needed to submit its plan by the end of June or risk losing the federal money. And Cooper and Kinsley still wanted at least a few hospitals on board to build momentum.

"The win here would be hospitals and the department solving a problem that was real and meaningful for people, and we could walk out together and say this is what we got done," Kinsley said in an interview later.

Email records indicate that some systems, such as Cone Health, considered joining Kinsley and the governor when they announced the plan July 1.

None did. And by the following week, the state was barraged by letters from hospitals across the state lambasting the medical debt plan.

Ken Haynes, a senior Atrium official, wrote that the proposal would set "a dangerous precedent" and warned that insurance companies would raise deductibles, knowing that hospitals would have to forgive bills for many patients.

Novant Health, a large nonprofit system with seven hospitals in and around Charlotte, argued that financial assistance should be limited to uninsured patients and those with Medicaid. "Policies should avoid broad debt relief approaches that divert scarce hospital resources," wrote Alice Pope, the system's chief financial officer.

In 2023, Novant posted $8.3 billion in revenue and more than $460 million in profit.

New Bern-based CarolinaEast Health System, insisted the plan would "cripple rural healthcare organizations." Granville Health System, which runs a community hospital in the center of the state, contended that "hospitals are being used as pawns to achieve preferred political and policy objectives on questionable legal authority."

In mid-July, Lawler at the North Carolina Healthcare Association wrote directly to the head of the federal Centers for Medicare & Medicaid Services, urging it to reject the state's plan. Lawler said the plan "set a dangerous precedent" by linking Medicaid funding to medical debt policy.

Dominoes Fall

But North Carolina officials maintained close contact with the federal agency, giving them confidence they'd get the green light, despite hospital opposition.

On July 26, approval came through, a month and a day after North Carolina submitted the plan. Federal review of state plans can often take three or four times as long.

The state gave hospitals until 5 p.m. on Friday, Aug. 9, to accept the new medical debt standards or forfeit billions of dollars.

By Aug. 7, only 37 of the state's 99 hospitals had signed on.

Then the tide shifted. By Friday evening, state officials had locked in all 99.

Implementing the plan promises to be complicated, with logistical challenges, wary Republicans in the legislature, and hospitals smarting over the showdown. And, as state leaders acknowledge, more action is needed to constrain high prices hospitals still command.

But with taxpayers pumping billions of dollars into health systems nationwide, North Carolina's gambit offers a potential road map for leveraging public funds to confront a crisis that burdens some 100 million people in the U.S.

"North Carolina has been really strategic in using the lever of its Medicaid payments," said Christopher Koller, president of the Milbank Memorial Fund, a health policy nonprofit. "The focus of health systems should be caring for patients, not bullying them for every last penny to run their business."

Noam N. Levey: nlevey@kff.org, @NoamLevey