Some Ohio cities erasing residents’ medical debt
A growing number of Ohio communities are taking steps to erase their residents’ medical debt through government partnerships with RIP Medical Debt, a New-york based nonprofit.
RIP was founded in 2014 by two former debt collection executives, Craig Antico and Jerry Ashton. They “sort of had this ‘eureka’ idea about taking advantage of the for-profit debt ecosystem in this country and kind of flipping it on its head,” said Daniel Lempert, vice president of communications for RIP.
RIP takes donations and buys large bundles of medical debt at a steep discount — $1 usually can leverage $100 in debt relief. The debt erasure is a gift with no tax consequences to recipients.
The organization has relieved more than $8.5 billion in debt so far and helped nearly 5.5 million individuals and families in all 50 states and Washington, D.C., according to its website and Lempert.
Up until last fall when Cook County in Illinois became the first governmental body to take $12 million in American Rescue Plan Act dollars to leverage and erase $1 billion in medical debt, RIP was partnering with other nonprofits, such as churches. A Cincinnati church in 2020 erased $46.5 million. Donations can also come from individuals, including some high-profile donors like philanthropist Mackenzie Scott, who has donated $80 million.
According to the Kaiser Family Foundation, 4 in 10 adults in the U.S. say they have some kind of medical debt. Twothirds of bankruptcies cite medical debt as a leading cause.
Uninsured adults, women, Black and Hispanic adults, parents, and those with lower incomes are especially likely to say they have health care-related debt, the Kaiser study said. RIP’S debt erasure work has helped both uninsured and insured who struggle with medical debt from expensive co-pays or costs not covered by insurance, said Lempert.
RIP negotiates and purchases medical debt in bulk from a hospital, which can include current and past-due bills sold to a debt collector.
RIP assists patients with a household income up to 400% of the federal poverty level. That is $54,360 for an individual or $111,000 for a family of four. Additionally, the debt must be 5% or more of annual income. Patients can’t apply to be considered for debt relief. RIP works with participating hospitals to determine which patients are eligible for help based on its criteria.
Based on the seed money provided by participating municipalities, RIP provides an estimate of how much of residents’ medical bills can be erased. The nonprofit also sometimes uses some of its own donated funds to help communities abolish more debt, Lampert said.
The nonprofit does not ask for any demographic information about those in debt, but “we know that medical debt is more burdensome statistically on individuals of color,” said Lampert.
In Cook County, Illinois, letters began going out to consumers whose debts have been erased recently.
Toledo became the first Ohio city to partner with RIP with an $800,000 investment in ARPA funds and an equal match from surrounding Lucas County, which could retire $240 million in medical debt.