New York joins other cities, wiping out $2 billion in medical debt for 500k patients
This initiative marks the largest municipal effort to erase medical debt in partnership with nonprofit RIP Medical Debt, which buys bundled medical debt portfolios from providers, including hospitals and commercial debt buyers.
New York City officials this week announced plans to join a growing national movement by helping its citizens pay off a total of $2 billion in medical debt.
“Up to half-a-million New Yorkers will see their medical debt wiped out thanks to this life-changing program – the largest municipal initiative of its kind in the country,” Mayor Eric Adams said. “We are proud to bring this relief to families across the five boroughs as we continue to fight on behalf of working-class New Yorkers.”
The program will start early this year, and the city will invest $18 million over the next three years. RIP Medical Debt, a New York-based nonprofit, will buy bundled medical debt portfolios from providers, including hospitals and commercial debt buyers, and then eliminate the debt for pennies on the dollar.
The debt relief program targets city residents who have medical debt that is 5% or more of their annual household income, as well as those with an annual household income that is at or below 400% of the federal poverty line. Recipients will be alerted that their financial burden is lifted.
Adams noted that medical debt disproportionately affects Black and Latino communities, which are more likely to be uninsured or underinsured. “Working-class families often have to choose between paying their medical bills or some of the basic essentials that they need to go through life,” he said.
RIP Medical Debt typically can retire at least $100 worth of debt for every $1 of government funds. Its software selects eligible patients who remain anonymous, so it’s hard to know what the impact of eliminating that debt might be across a community or for the families that benefit, officials said.
The announcement builds on a growing national movement that began several years ago in Cook County, Ill. Six other local governments have since followed suit, including Akron, Cleveland and Toledo, Ohio; New Orleans; Wayne County, Mich.; Washington, D.C.; and now New York City. RIP Medical Debt currently is in talks with 30 additional municipalities and states, including Connecticut, New Jersey and Michigan.
Related: Biden Administration is urged to relieve medical debt with more aggressive approach
Medical debt has become the top cause of personal bankruptcy in the United States. More than 100 million Americans face varying degrees of medical debt totaling about $195 billion, according to a 2022 Kaiser Family Foundation report.
Efforts to forgive medical debt enjoy broad political support, said Allison Sesso, CEO of RIP Medical Debt, citing a recent survey by the organization showing its bipartisan appeal. “84% of people agreed that it is the responsibility of government to ensure health care is affordable,” she said, “and that position is held by people on the left and the right.”