Medical debt is pervasive. Over 100 million Americans owe for necessary medical treatments.
Sometimes the debt is created because the patient cannot afford to make all of the co-pays. Sometimes it’s created because a doctor or lab refused to accept what the insurance company was willing to pay, and sometimes it’s caused by a lack of health insurance.
Over 27 million working Americans still don’t have coverage.
And make no mistake about it, having medical debt has an impact on almost all aspects of one’s life. The debt makes it hard to get a mortgage, a car loan, and often even a credit card. Medical bills cause 65% of all bankruptcies. Insurance companies base premiums, at least partly on credit scores, which are driven down by medical debt. Landlords look at credit scores and often refuse to rent to those who have low numbers.
Perhaps most shockingly, employers are now looking at credit scores to decide if they will make a job offer, and doctor offices refuse service to those who owe some portion of an old medical bill.
Toledo, a city in Ohio, a state that overwhelmingly voted for President Trump, has decided to help its citizens overwhelmed with medical debt.
The City is taking a small percentage of what it received from the American Rescue Plan Act (Federal Dollars allocated to help alleviate the damages the COVID epidemic caused.) to buy old medical debt at a deep discount and eliminate it. Chicago followed Toledo, and now Pittsburg is following both. All three have decided to use money set aside to help with the fallout from COVID to eliminate medical debt. Will Philadelphia?
As part of the Lenfest Foundation’s Next Mayor’s Project, Hall Monitor is asking all the declared candidates if they support using a small percentage of the ARPA surplus to eliminate medical debt for thousands who are forced to struggle.
The idea behind the cities’ plan is not a new one. Instead of debt collectors buying up old medical bills from doctors, labs, and hospitals, the cities are supporting the efforts of a non-profit, RIP Medical Debt, to buy the debt.
Both the Debt collectors and the non-profit buy the debit for “pennies on the dollar .” Either, for $ 1,000 can buy as much as $ 25,000 in medical debt. The difference is what the two do with the debt they buy.
The debt collectors do whatever they can to profit from buying the discounted debt. Collectors go so far as to sue those whose insurance companies didn’t pay the entire bill.
The Kaiser Foundation reviewed the actions of debt collectors and found:
- More than two-thirds sue patients or take other legal action against them, such as garnishing wages or placing liens on the property;
- A similar share of the hospitals report patients with outstanding bills to credit rating agencies, putting patients’ credit scores and their ability to rent an apartment, buy a car, or get a job at risk;
- A quarter sell patients’ debts to debt collectors, who in turn can pursue patients for years for unpaid bills;
- About 1 in 5 deny non-emergency care to people with outstanding debt;
- Nearly 40% of all hospitals examined make no information available on their websites about their collection activities, although KHN, in some cases, was able to obtain the information through repeated requests.
RIP Medical Debt, after it buys the debt with money allocated to help free people from the debts, sends a letter to the family saying their debt has been eliminated. The non-profit also send letters to the credit reporting agencies ensuring that the family will no longer suffer from a lower credit score because they became ill and couldn’t pay all of the medical bills the insurance company refused to cover.
Much like a TIFF program that uses tax dollars to help businesses spend more money in the community, A city buying medical debt will help citizens purchase homes and cars and spend more money in our community.
On average, for every dollar the City uses to help, 100 dollars in medical debt is forgiven.
Should Philadelphia follow Toledo, Chicago, and Pittsburg? Which of the announced candidates will support using a small percentage of the surplus federal dollars to help eliminate medical debt, and which will not? Listen to Hall Monitor this Wednesday to find out.