Ohio city and county plan to reduce medical debt with federal pandemic aid
A city and county in Ohio plan to use federal pandemic relief dollars to erase residents’ medical debt, reducing a problem worth at least $195 billion to consumers nationwide.
The Toledo City Council voted on Wednesday to dedicate $800,000 to eliminating medical debt in the northwest Ohio city through a partnership with RIP Medical Debt, a New York-based charity. York who buys unpaid medical bills just to clear them. Lucas County commissioners, where Toledo is located, intend to match that with their own $800,000, bringing the total to $1.6 million, according to the Toledo Blade.
Since RIP Medical Debt is using the dollars raised to purchase wholesale debt at deeply discounted prices and will source directly from local hospitals, the $1.6 million deal could potentially result in the erasure of 190 to $240 million in overdue medical bills, according to an initial assessment, said Daniel Lempert, spokesman for the association. However, the total amount will only be clear once the organization has reached agreements with hospitals in the region.
“Because of our model and the way medical debt is bought and sold in the United States, we are well positioned to stretch public funds even further,” said Allison Sesso, President and CEO of RIP Medical. Debt, in a statement. “A dollar in the program abolishes an average of $100 in medical debt.”
Working with local hospitals, Lempert said RIP Medical Debt will analyze overdue accounts to find out who is eligible, since people are only eligible if they earn 400% or less of the federal poverty level (up to 111 $000 for a family of four). this year) or if the purchase medical debt represents 5% or more of their gross annual income. After RIP Medical Debt has made its purchases, people will learn by letter that their debts have been cleared.
The city is funding debt relief with money from the American Rescue Plan Act (ARPA), the $1.9 trillion stimulus bill passed by Congress in 2021 which, among many other initiatives , has given billions of dollars to state, city and tribal governments to help. recovering from the COVID-19 pandemic. Lempert said Lucas County also uses ARPA dollars.
““We let people go bankrupt; we let people miss doctor’s appointments – or avoid going to the doctor – because they don’t want to pay those co-payments because they can’t afford it.”
Toledo City Councilwoman Michele Grim, a Democrat who led the initiative and won a seat in the Ohio state House of Representatives in last week’s election, said the model was based on the Cook County, Illinois plan to write off up to $1 billion in medical debt. using $12 million in federal funds, also in partnership with RIP Medical Debt.
“Medical debt is the #1 reason people go bankrupt,” Grim told MarketWatch. “And a lot of people have been affected by the pandemic; they had difficulty putting food on the table, difficulty paying their rent, difficulty paying their mortgage, difficulty paying their utilities.
“This will contribute to the economic recovery of many Toledo residents,” Grim added.
A number of cities have dedicated their ARPA funding to innovative initiatives that are most likely to benefit low-income residents. Some cities, for example, have used the money to launch guaranteed income pilot projects, fund affordable housing and weatherization of low- and middle-income homes, and provide grocery gift cards.
But medical debt is a particularly pernicious problem, especially amid a pandemic that has burdened some patients with extra bills. According to KFF and the Peterson Center on Healthcare, about 23 million people, or nearly one in 10 adults, have “significant medical debt,” and census data indicates that US citizens owe at least $195 billion.
According to the Consumer Financial Protection Bureau, medical debt is also the most frequently reported debt to consumer reporting companies and disproportionately affects young adults, blacks and Hispanics, and low-income people. Many counties with the highest levels of medical debt are located in states that have yet to expand Medicaid, a government health insurance program for low-income people, the center-left Urban Institute has found. .
Although Ohio is a Medicaid-expanding state, other factors could make Toledo residents vulnerable to debt: Toledo has a poverty rate of 25.6%, compared to the national rate of 11.6 %, for example. And this is an opportunity to provide some serious relief to the struggling residents of Toledo and Lucas County.
For many local governments, Grim noted, ARPA has provided unique flexible funding, providing them with opportunities to be creative and find new ways to help residents outside the confines of typical government programs. She said she has been in contact with “people all over the country” who also want to do this in their communities.
“I see this as a national movement because we’re the richest country, but we don’t have universal health care,” Grim said. “We let people go bankrupt; we let people miss their doctor’s appointments – or avoid going to the doctor – because they don’t want to pay those co-payments because they can’t afford it.
“Washington, DC may not have a plan to eliminate medical debt,” she added, “but Toledo, Ohio does.”