Relieving the Growing Burden of Medical Debt


Medical debt is a growing burden for millions of people around the country, from parents in Illinois to immigrants in Colorado to residents of the “Diabetes Belt” across the South, and it’s now being recognized as a health-care problem. People often forgo care or prescriptions if they have debt, according to a KFF Health News investigation, and the psychological toll can be steep, too.

The Biden administration proposed barring medical debt from credit reports. This morning, Senate Health Committee Chair Bernie Sanders (I-Vt.) will convene a hearing in D.C. on medical debt.

Now local governments are looking at how they can assist residents by buying up medical debt on the cheap and retiring it.

Under a measure the Los Angeles County Board of Supervisors approved unanimously last month, the county will enter into a pilot program with Undue Medical Debt (previously known as RIP Medical Debt), a national organization that turns the debt collection process on its head. Instead of buying outstanding debt from hospitals and pursuing patients for payment, as commercial debt collectors do, Undue Medical Debt looks to buy debt, usually for pennies on the dollar, then retire it.

Los Angeles County’s $5 million investment is expected to allow Undue Medical Debt to help 150,000 low-income residents and eliminate $500 million in debt. It’s one component of the county’s larger medical debt plan, which includes tracking hospitals’ role in feeding the $2.9 billion problem, boosting bill retirement for low-income patients and monitoring debt collection practices.

Four in 10 adults in the United States struggle with health-care debt, and Los Angeles County has labeled it a public health issue on par with diabetes and asthma.

The logic behind the effort is simple. “Getting health care should never make anyone sicker,” said Naman Shah, medical and dental affairs director at the county public health department.

Undue Medical Debt has contracted with more than a dozen city, county and state governments across the country to provide local debt relief, including Cook County, Ill. (home to Chicago); Toledo; Arizona and New Jersey.

Since its inception, Undue Medical Debt has relieved almost $12 billion in medical debt across the country.

Beginning in 2022, Cook County has leveraged American Rescue Plan dollars — federal emergency funds made available during the coronavirus pandemic — to wipe out over $382 million in medical debt for more than 213,000 residents. About 15 other state or local governments have also used American Rescue Plan funds to retire medical debt, according to Undue Medical Debt, and other jurisdictions are developing similar plans.

Mona Shah of Community Catalyst, a national health equity and policy organization, applauds the local government moves but cautions that one-time debt relief goes only so far. She endorsed Los Angeles County’s approach: pairing debt relief with a longer-term effort to understand and address the root causes of medical debt, in part by getting a better handle on debt collection practices and helping hospitals improve their financial assistance programs.

“We don’t want to ever deny that relief, but we really need to focus on preventing medical debt from happening in the first place,” Shah said.


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