Some local governments show the way to slaying medical debt with federal relief money, for pennies on the dollar

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Do your local governments have some pandemic relief money that hasn’t been spent or appropriated? Perhaps they would be interested in helping to wipe out local residents’ medical debt for pennies on the dollar, as some have. "Local governments in Ohio and Illinois are using American Rescue Plan Act money to relieve residents struggling with medical debt by partnering with an organization that buys debt and wipes the slate clean for debtors. It’s a strategy advocates say could be duplicated across the country to help erase a multi-billion-dollar problem," reports Casey Quinlan of States Newsroom.

Toledo is an example where $800,000 of ARPA funds were used to erase eligible residents' medical debt and "Commissioners in Lucas County, of which Toledo is a part, also announced they would contribute $800,000 in ARPA funds," Quinlan writes. "The combined $1.6 million will go to RIP Medical Debt, a nonprofit based in New York, which buys medical debt from hospitals in bundles at a much lower price than the actual debt, allowing the money to go further." Michele Grim, a Toledo City Council member who pushed to have RIP Medical Debt help with the transactions, said, "This means that $190 million to $240 million of community members’ debt will be eliminated."

The sheer size of medical debt can be overwhelming for many Americans. "According to a Kaiser Family Foundation report published in June, 4 in 10 adults in the United States have some kind of medical debt, and 1 in 5 of those with health care debt don’t think they will ever be able to pay off their debt," Quinlan reports. "The Consumer Financial Protection Bureau estimates the total amount of medical debt in the U.S. at $81 billion, based on data from credit reporting agencies, but acknowledges its total is likely understated."

Allison Sesso, president of RIP Medical Debt, told Quinlan that more local governments have reached out to the group to use ARPA funds to wipe out medical debt after learning about Toledo's and Cook County’s efforts: “I think it was sort of a no-brainer for anyone that’s focused on health equity and the recovery, post-Covid, on their communities, to get rid of this medical debt burden from people as quickly as possible.”