Paying off medical debt for pennies on the dollar

In the many stories about debt forgiveness in the US that have surfaced in recent years, I’ve never understood how it is possible to buy debt at a huge discount – a dollar for $100 of debt, for example. If it is possible to do this, why not reduce the debt for the debtor, I always wonder.

But in any case, I was thinking about this as I was reading about a nonprofit, RIP Medical Debt, which has bought $6.7 billion of debt, freeing 3.6 million people from having to repay it. That is just astounding. Almost as astounding as the statistic that 41% of American adults have medical debt.

RIP helps people like Georgia high school teacher and single mother Terri Logan, who is mentioned in a recent NPR story about RIP. She got a huge bill from the hospital 13 years ago after giving birth to her daughter two months prematurely. “The weight of all of that medical debt — oh man, it was tough,” Logan said. “Every day, I’m thinking about what I owe, how I’m going to get out of this … especially with the money coming in just not being enough.”

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Then she got some bright yellow envelopes in the mail a few months ago, saying that RIP had bought and then forgiven all those past medical bills. She was astounded: “Wait, what? Who does that?”

RIP Medical Debt was founded in 2014 by two former debt collections executives, Craig Antico and Jerry Ashton, who developed a new way to relieve medical debt: using donations to buy large bundles of debt that is then erased with no tax consequences to donors or recipients.

The story of how this happened is fascinating. It starts with Occupy Wall Street, and Jerry’s curiosity about this gathering which was happening in the park right outside his office. Occupy Wall Street folks had an idea for a rolling debt jubilee – they wanted to raise $50,000 to buy $1 million of defaulted debt, and abolish it. Was it feasible, they asked Jerry.

He didn’t think much of it. “A million dollars worth of debt in my world isn’t even a rounding error,” he says in a Freethink video. But they convinced him, and he said “What do you need?”

Occupy needed expertise, specifically about the debt collection business. So Jerry called Craig, and they worked with Occupy to make the rolling jubilee a reality.

Occupy was able to raise $700,000, and with that, Jerry and Craig were able to buy over forty million dollars in medical, student and payday debt – and Occupy abolished it.

But then one day, according to the video, Occupy said they had decided to go in another direction, and that they were going to close it down. Craig and Jerry didn’t want to see that happen. “We’re just gonna have to do it ourselves,” they said.

Raising money to do that turned out to be hugely challenging, however – until John Oliver came along. The tv host started a debt buying company, and worked with RIP Medical Debt to buy and abolish about fifteen million dollars of medical debt. And of course he talked about it, in his usual inimitable fashion, on his tv program, Last Week Tonight. 

That publicity turned a serious attempt to make a difference into an amazing movement, Jerry said. There are heartwarming stories of tv stations and churches buying and forgiving medical debt through RIP, for example.

It has grown dramatically during the pandemic, as inflation and job losses stressed more families. The group now buys delinquent debt for those who make as much as four times the federal poverty level, up from twice the poverty level, reports NPR.

“Medical debt is an American crisis,” RIP Medical Debt said in December 2020. “Forty-one percent of working age Americans are paying off medical debts or struggling to do so. An additional 7 million elderly adults struggle to pay medical bills. Two-thirds of personal bankruptcies cite medical debt as a key factor. The pandemic has worsened this problem: between February and May of this year 5.4 million Americans lost their health coverage – more people than have ever lost coverage in a year.”

Expansion of RIP’s work has been fuelled by a surge in donations. A $50 million donation by Mackenzie Scott late in 2020 was “a gamechanger for RIP Medical Debt, allowing us to move towards our goals in a greatly accelerated way,” said executive director Allison Sesso. “We will immediately put this generous donation to work against our vision that includes the strategic engagement of communities across the country, to achieve health equity for all.”

New regulations allow RIP to buy loans directly from hospitals, expanding its access to debt, NPR reported, and the group is constantly looking for new debt to buy from hospitals. One Massachusetts hospital, Heywood Healthcare system donated $800,000 of medical debt to RIP in January, in part because patients with outstanding bills were avoiding treatment.

Sesso says RIP is advising hospitals on how to better screen patients to find those eligible for a kind of community benefit program known as ‘charity care’. Most hospitals are nonprofit and required to offer community benefit programs that may cut costs for patients who earn as much as two to three times the federal poverty level. But many eligible patients don’t know about charity care.

Meanwhile, the Debt Collective, which grew out of Occupy’s work, has moved into greater advocacy of changes in federal law. In 2015, it organized the first US student debt strike in collaboration with members who had attended Corinthian Colleges, a for-profit college chain. That campaign mobilized tens of thousands of people to win changes to federal law and over $2 billion in student debt abolition to date, it says.

“Our manifesto, Can’t Pay Won’t Pay: The Case for Economic Disobedience and Debt Abolition, was published in 2020, outlining a vision for debtor organizing that goes far beyond student debt to include housing debt, bail and probation debt, credit card debt, utility debt, municipal debt and more,” they say.


How Two Former Debt Collectors Made $6.7 Billion in Medical Debt Disappear. Reasons to be Cheerful, Sep. 9, 2022.

“We Have A Broken Healthcare System”: An Ohio County Is Trying To Erase Up To $240 Million In Medical Debt. Buzz Feed News, Nov. 12, 2022

These Local Governments Are Using Federal Aid to Cancel Medical Debt. Next City, Nov. 22, 2022

Cover image: Vidal Balielo Jr. on Pexels