CNHI News Service
Shortly after giving birth to a two-month-premature daughter, Terri Logan received a hospital bill. She flinched at the string of numbers separated by commas.
Logan, who was a high school math teacher in Georgia, put it aside and ignored later bills. She was a single mother who knew she had no way to pay. “I avoided it like the plague,” she said, but the avoidance didn’t make the bills forget.
“The weight of all that medical debt — oh man, that was tough,” Logan said. “Every day I think about what I owe, how I’m going to get by…especially with the money that just isn’t coming in enough.”
Then, a few months ago — nearly 13 years after the birth of his daughter and many panic attacks later — Logan received bright yellow envelopes in the mail. They belonged to a non-profit group telling him that he had bought and then forgiven all those past medical bills.
This time it was a very different surprise: “Wait, what? Who do this ?
RIP Medical Debt does. The nonprofit has exploded during the COVID-19 pandemic, freeing patients from medical debt, thousands at a time. His new approach is to buy wads of overdue hospital bills — debts incurred by low-income patients like Logan — and then simply erase the obligation to pay them off.
It’s a model developed by two former debt collectors, Craig Antico and Jerry Ashton, who built their careers hunting down patients who couldn’t pay their bills.
“They would have conversations with people on the phone, and they would understand and get a better idea of the difficulties people were facing,” said Allison Sesso, CEO of RIP. Eventually they realized they were in a unique position to help people and moved from debt collection to philanthropy.
What triggered Ashton’s change of heart was his meeting with activists from the Occupy Wall Street movement in 2011 who talked to him about how to help ease Americans’ debt burden. “As a bill collector collecting millions of dollars in medical bills over my career, I’m suddenly reformed: I’m a predatory donor,” Ashton said in a video from Freethink, a new media journalism site.
After helping Occupy Wall Street activists buy debt for a few years, Antico and Ashton launched RIP Medical Debt in 2014. They began raising funds from donors to buy back debt in secondary markets – where hospitals sell debt for pennies on the dollar to companies who profit when they collect that debt.
RIP buys debt like any other collection company would – except instead of trying to make a profit, it sends notices to consumers saying their debt has been cleared. To date, RIP has repurchased $6.7 billion in outstanding debt and relieved 3.6 million people of debt. The group says retiring $100 in debt costs an average of $1.
RIP grants his blessings randomly. Sesso said that depends solely on the debts of hospitals available for purchase. “So no one can come up to us, raise their hand and say, ‘I would like you to alleviate my debt,'” she said.
Yet RIP expands the pool of people eligible for relief. Sesso said with inflation and job losses stressing more families, the group is now buying up overdue debt for those earning up to four times the federal poverty level, up from twice the poverty level. .
A recent surge in giving — from students to philanthropist MacKenzie Scott, who gave $50 million at the end of 2020 — is fueling RIP’s expansion. This money enabled RIP to hire staff and develop software to scour databases and identify targeted debt more quickly.
New regulations allow RIP to buy loans directly from hospitals, instead of just on the secondary market, expanding its access to debt.
Sesso specifies that the group is constantly looking for new debts to buy back from hospitals: “Call us! We want to talk to every hospital that wants to pay off their debt.
Sesso stressed that RIP’s growing business was nothing to celebrate. This means that millions of people have fallen victim to an American health care and insurance system that is simply too expensive and too complex for most people to navigate. As KHN and NPR reported, more than half of American adults say they’ve gotten into debt in the past five years due to medical or dental bills, according to a KFF poll. A quarter of adults with health care debt owe more than $5,000. And about 1 in 5 people, regardless of how much debt they have, say they don’t expect to ever pay it back.
RIP is one of the only ways for patients to get immediate debt relief, said Jim Branscome, a major donor. Policy change is slow. Many factors contribute to medical debt, he said, and many of them are difficult to address: rising hospital and drug prices, high out-of-pocket costs, less generous insurance coverage and widening inequalities. racial lines in medical debt. The pandemic, Branscome added, has exacerbated all of that.
The “pandemic has just made it much harder for people who are racking up incredible medical bills that aren’t covered,” Branscome said. He’s a longtime advocate for the poor in Appalachia, where he grew up and where he says chronic illnesses make medical debt a lot worse. It undermines the service point in the first place, he said: “There’s pressure and desperation.”
For Terri Logan, the former math teacher, her unpaid medical bills added to a host of other pressures in her life, which later turned into debilitating anxiety and depression. Now a single mother of two, she described the strain of living with debt hanging over her head. She had panic attacks, including “a pain that comes up the left side of your body and makes you feel like you’re about to have an aneurysm and you’re going to pass out,” she recalls .
Some hospitals say they want to alleviate this destructive cycle for their patients. The Heywood Healthcare system in Massachusetts donated $800,000 in medical debt to RIP in January, essentially ceding control of that debt, in part because patients with unpaid bills avoided seeking treatment.
“We wanted to remove at least one avoidant stressor to get people to come in to get the care they need,” said Dawn Casavant, head of philanthropy at Heywood. Plus, she says, “it’s likely that this debt wouldn’t have been collected anyway.”
A criticism of RIP’s approach has been that it is not preventative: the group is stepping in after what may be years of financial stress and destroyed credit ratings that have hurt patients’ chances of renting apartments or to get car loans. (The three major credit rating agencies recently announced changes to how they will report medical debt, to some extent reducing the damage it does to credit scores. However, consumers often take out second mortgages or credit cards to pay for medical services.)
“A lot of damage will have been done by the time they come to relieve this debt,” said Mark Rukavina, program director for Community Catalyst, a consumer advocacy group.
Rukavina said state laws should require hospitals to better use their financial assistance programs to help patients. “Hospitals shouldn’t be paid,” he said. “Basically: don’t reward bad behavior.”
Most hospitals in the country are non-profit, and in return for this tax status, they are required to offer community benefit programs, including what is often referred to as “charitable care.” According to the hospital, these programs reduce costs for patients who earn up to two to three times the federal poverty level. But many eligible patients never find out about charity care – or are uninformed. They are charged full price and then hounded by collection agencies when they don’t pay.
Recently, RIP also started trying to change that.
RIP CEO Sesso said the group advises hospitals on how to improve their internal financial systems to better screen patients eligible for charity care – essentially, by preventing people from going into debt in the first place. In the end, it’s a much better result, she says.
“We prefer that hospitals reduce the need for our work in the back,” she said. “I would say hospitals are open to feedback, but they’re also a bit blind to how poorly some of their financial aid approaches are working.”
Terri Logan said no one mentioned the charitable care or financial aid programs to her when she gave birth. Logan also didn’t realize there was help out there for people like her, people with jobs and health insurance but making just enough money to not qualify for help like food stamps.
Debt clouded her, clouding her spirits. “I don’t know; I just lost my mojo,” she said. “But I’m kind of finding it,” she added. dealing with medical debt rekindles a long-dormant dream of performing on stage.
Its first performance is scheduled for this summer.
About this project
“Diagnosis: Debt” is a reporting partnership between KHN and NPR exploring the magnitude, impact, and causes of medical debt in America.
Reporters from KHN and NPR also conducted hundreds of interviews with patients across the country; spoke with doctors, healthcare industry leaders, consumer advocates, debt lawyers and researchers; and reviewed dozens of studies and surveys on medical debt.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Along with policy analysis and polls, KHN is one of the three main operating programs of the KFF (Kaiser Family Foundation). KFF is an endowed non-profit organization providing information on health issues to the nation.