This nonprofit erased $6.7 billion in medical debt — and it’s just getting started

RIP medical debt Is.

The nonprofit has exploded during the COVID-19 pandemic, freeing patients from medical debt, thousands at a time. His innovative 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 back.

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 Medical Debt. Eventually they realized they were in a unique position to help people and moved from debt collection to philanthropy.

Antico and Ashton launched the Medical Debt RIP in 2014. They began raising money from donors to buy back debt in secondary markets – where hospitals sell debt for pennies on the dollar to companies that 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.

Now RIP is expanding the pool of people eligible for relief.

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.

An increase in recent giving – from students to philanthropists MacKenzie Scott, who gave $50 million at the end of 2020 – powers the expansion of RIP. 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.

But RIP’s growing business, Sesso said, is 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.

Many factors contribute to medical debt, and many of them are difficult to address: rising hospital and drug prices, high out-of-pocket expenses, less generous insurance coverage, and widening racial inequities in debt. medical.

The pandemic, said Jim Branscome, a major donor, has exacerbated all of that.

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.

Some hospitals say they want to alleviate this destructive cycle for their patients. Heywood Health System in Massachusetts donated $800,000 in medical debt to RIP in Januaryessentially ceding control of that debt, in part because patients with unpaid bills avoided 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 main rating agencies have recently announced changes to how they will report medical debt, reducing its harm to credit scores to some extent.)

“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.

To help, RIP is now advising hospitals on how to improve their internal financial systems so they better select patients eligible for charity care – essentially, preventing people from going into debt in the first place. In the end, it’s a much better result, Sesso said.

As for Terri Logan, she recalled how debt clouded her, clouding her mind. “I don’t know; I just lost my mojo,” she said.

“But I’m kinda figuring it out.”

Kaiser Health News, a nonprofit health newsroom, is an editorially independent part of the Kaiser Family Foundation and is not affiliated with Kaiser Permanente.

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John A. Bogar