Toledo, Ohio has given its residents a new and unusual holiday gift: the promise of medical debt relief.
In early November, its city council voted to use $800,000 of American Rescue Plan Act funding to wipe out the medical debt of residents in need, with the help of an organization called RIP Medical Debt. Lucas County, where Toledo is the county seat, even said it would match the amount for a total of $1.6 million toward eliminating medical debt.
“I think this is going to help a lot of people with putting food back on the table, paying the rent, paying your utilities, help them go back to the doctor,” Michele Grim, the city councilwoman and state representative-elect who led the push for the program, told MedPage Today.
With the $1.6 million, officials expect to wipe out $240 million worth of debt, Grim said. A spokesperson for Lucas County said it is “currently pursuing the funding source.”
Grim had heard of a similar program in Cook County, Illinois that committed $12 million in federal money to cancel medical debt. The ordinance she proposed was held twice, but finally passed 7-5 on November 9.
The move is also expected to give a leg-up to Toledo’s economy. “Here, our wages are pretty stagnant,” Grim said. “And we have a higher poverty rate than the national average. So it’s really going to help a lot of people, and help aid in economic recovery for Toledo and Lucas County residents.”
RIP Medical Debt, which was founded by former debt collectors, buys up unpaid medical debt at much lower amounts than the outstanding total, cancelling the debt instead of collecting on it. The unpaid debt is purchased in secondary marketplaces, and more recently, directly from hospitals and health systems now that a federal advisory opinion has approved that model.
Those eligible for the debt cancellation — people who make 400% of the poverty level or below, or whose debts make up at least 5% of their total income — won’t have to apply. Instead, after the debt is sold, RIP Medical Debt will send them a letter in the mail notifying them that they’re debt-free.
“It’s a very uniquely American problem,” Grim said. “And this is a way to help give people relief.”
Allison Sesso, MPA, president and CEO of RIP Medical Debt, told MedPage Today that the impact of this relief can be huge. Medical debt, she said, can erode mental health, prompt people to borrow money from friends and family, take on extra jobs, or even avoid seeking medical care altogether.
“The fact that for pennies on the dollar, we’re able to help so many people remove this burden — why not? It makes a whole lot of sense. And it really can help propel them forward,” Sesso said. Beneficiaries have told the organization that it helped them “climb back up” from other debts, “because [they] don’t feel completely buried,” Sesso said.
Census Bureau data show that around 17% of U.S. adults owed a medical debt, while a nationally representative Kaiser Family Foundation survey of 2,375 adults found 41% reported being in some kind of medical debt.
A number of Toledo-area hospitals indicated their interest in negotiating with RIP Medical Debt, Sesso said. Once contracts with the local government are finalized, the organization can begin the process of talking with hospitals and physician groups who would provide them the information about patients’ eligibility. Overall, she said the process shouldn’t take more than a year.
Sesso and Grim said it’s a straightforward idea that’s picking up steam. “It’s not been that long that we’ve been asked to have a direct relationship with hospitals,” Sesso said. “And we’re growing as an entity and I think we’re just starting to get the word out about the fact that we exist. More and more hospitals are coming on board.”
Grim said she received around a half-dozen calls from other municipalities interested in implementing the same kind of initiative, and Sesso said five to 10 local governments had reached out. Both said they could not disclose additional details before decisions were finalized.
“It’s a simple program that really does help aid in the economic recovery of Americans, and it’s really something that the American Rescue Plan dollars were designed to do,” Grim said.
Sesso also noted that while her organization’s solution is a good one, it’s treating a symptom, not the cause, of a broken healthcare system.
“As we say, you can walk and chew gum at the same time, right?” Sesso said. “So we can be resolving the issue one person at a time, while also pointing to the fact that there’s got to be bigger solutions hashed out.”
Source: MedicalNewsToday.com
