Local governments in the US are beginning to work with RIP Medical Debt, a nonprofit group that uses private donor funds to buy up and pay off peoples’ health care debts, says a story that is part of Diagnosis: Debt, a reporting partnership between KFF Health News and National Public Radio that explores the scale, impact, and causes of medical debt in America. An estimated 100 million people in the US carry some form of health care debt.

In 2022, Cook County became the first local government to do so, after two staff members suggested to Toni Preckwinkle, president of the county board of commissioners in Cook County, Illinois, that the county could spend part of its federal pandemic rescue funds to relieve residents’ medical debt. The county is now in the process of spending $12 million — a tiny portion of its budget — to ultimately retire $1 billion worth of hospital bills for residents.

For nearly two centuries, Cook County has funded its own hospital and health system, Cook County Health, in part to provide care to all residents regardless of income, Preckwinkle said. That eats up nearly half of the county’s $9.3 billion annual budget. She says the pandemic only deepened racial and income gaps that affect peoples’ access to health care. “I always talk about the fact that medical debt is the leading cause of bankruptcy in the United States,” she says.

Seven other local governments have followed suit, including Akron, Cleveland and Toledo, Ohio, New Orleans, Wayne County, Mich., Washington, D.C., and now New York City, which has pledged to pay down $2 billion worth of residents’ medical debt. RIP is in talks with 30 additional municipalities and states, including Connecticut, New Jersey and Michigan.

RIP identifies unpaid hospital bills owed by people making up to four times the federal poverty level, then buys that debt on secondary markets or directly from hospitals at a small fraction of the original value. Typically, RIP can retire at least $100 worth of debt for every $1 of government funds, so the local initiatives could end up wiping out several billions in medical debt.

Nationally, medical debt disproportionately affects people of color and people who earn less. It also contributes to a vicious health cycle, discouraging many patients from seeking preventative or follow-up care, leading to worse and more expensive outcomes.

Allison Sesso, CEO of RIP Medical Debt, says RIP hopes to retire $2.5 billion worth of unpaid medical bills through various government initiatives this year – a tiny part of the $195 billion estimated medical debt held by Americans. Since local governments have begun talking about it, however, that is leading to other conversations about what else they can do to get more eligible families insured through Medicaid, or through the Affordable Care Act insurance marketplace, for example, she says.

It is also inspiring programs like one recently adopted by Milwaukee County, Wis., which urges hospitals and health systems to use credit reports to screen and automatically enroll eligible patients in financial assistance programs. These programs already exist to help reduce medical expenses for patients making up to three times the poverty level, but often patients are unaware or not told to apply for them. Automating the process may mean as many as 50% more patients may receive free or reduced-cost care, so they have a better chance of avoiding incurring medical debt in the first place, says Shawn Rolland, a member of Milwaukee County’s board of supervisors.

Source:

Cook County Medical Debt Relief Initiative Abolishes over $280 Million in Medical Debt for Cook County Residents. RIP Medical Debt.

NYC joins a growing wave of local governments erasing residents’ medical debt NPR, Jan 23 2024

Diagnosis: Debt.  KFF Health News and NPR 

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