Medical Debt Is Being Erased in Ohio

Medical Debt Is Being Erased in Ohio and Illinois. Is Your Town Next?

Over the next few weeks, tens of thousands of people in Cook County, Illinois, will open their mailboxes to find a letter from the county government saying their medical debt has been paid.

Officials in New Orleans and Toledo, Ohio, are finalizing agreements so tens of thousands of residents can receive a similar letter next year. On Dec. 19 in Pittsburgh, the City Council approved a budget that includes $1 million for medical debt relief.

More local governments will look to county managers and city councils to adopt a new strategy to address high health care costs. They partner with RIP Medical Debt, a non-profit organization dedicated to canceling medical debt by buying it from hospitals, health systems and collection agencies at deep discounts.

“We need universal health care in this country,” said Cook County Board of Commissioners Chairman Tony Perkwinkle. “But we’re not there yet as a nation, and so those of us in charge of local units of government must do everything we can to make health care accessible to people.”

According to a July 2021 report published in the medical journal JAMA, about 18 percent of Americans have medical debt that has been turned over to a third party for collection. This figure does not account for medical debt owed on credit cards or all medical bills owed to providers. Research shows that people with medical debt are less likely to get the care they need, and that medical debt can hurt a person’s credit and make it harder for them to secure a job.

Cook County plans to spend $12 million on medical debt relief and expects to have the first batch of beneficiaries discharged by early January. In Lucas County, Ohio, and its largest city, Toledo, up to $240 million in medical debt can be paid for as little as $1.6 million. New Orleans is seeking $1.3 million in fees to settle $130 million in medical debt. Pittsburgh’s budget could eliminate $1 million to $115 million in debt, officials said.

All of these measures are funded by Joe Biden’s trillion-dollar Save America plan, which provides local governments with cash to spend on infrastructure, public services and economic assistance programs. Health policy experts say that while reducing medical debt would immediately benefit people, it would not address the underlying causes of medical debt, which is almost non-existent outside the United States.

To qualify for debt reduction through the Medical Debt RIP, individuals must have a household income of up to 400 percent of the federal poverty level, or about $111,000 for a family of four, or medical debt equal to 5 percent of their annual income. People can’t apply for deemed debt relief, and they don’t pay tax on their debt purchases. RIP Medical Debt analyzes the loan portfolio to determine who qualifies.

Wendy Piestro, CEO of United Way of Greater Toledo, said: “This loan facility can ease the financial burden for the 43 percent of families who are either living in poverty or need to pay for housing, child care, food, transportation and etc. have problems, reduce it. Costs of care in Toledo, which has a population of about 269,000.

“It puts some of the economic power back into the hands of people who are giving and really helps them plan for their own stability,” he said.

Michael Grimm, who joined the Toledo City Council in January, read about Cook County’s initiative to use $180 million in US$180 million in medical debt relief.

“There’s something very simple that local governments can do, maybe state governments can do, to really help ease this burden on people because we really need change in our system and it’s going to take years,” Grimm said. » He left the council at the end of the year because he was elected as a Democratic state representative in November.

The Toledo City Council voted 7-5 on Nov. 9 to provide $800,000 to pay off the loan. His contribution was matched by Lucas County, which resulted in $1.6 million in medical debt reduction. The city, county and RIP Medical Debt are now working on an agreement.

One council member opposed to the plan was George Saranto, who said he voted against it because the top priority for funding was public safety, including upgrades to the city’s fire stations and police vehicles. While Saranto said he is not opposed to reducing medical debt, he is concerned about state funding for cities and towns, which is expected to be 1.66 percent of Ohio’s 2022-2023 budget. “Ohio has money,” he said. “Toledo is not.”

Medical debt relief seems to be common. A poll by Tulchin Research found that 71% of respondents supported it. 50 percent supported student loan debt relief, 65 percent supported Medicare for All, and 68 percent supported Medicaid expansion. The national poll of 1,500 people was conducted online Nov. 14-20 after the Toledo vote and has a margin of sampling error of plus or minus 3 percent. (Grim’s husband works for a survey company.)

This debt reduction comes as states change how they treat medical debt.

In November, New York Gov. Kathy Hochul signed a law that prohibits health care providers from assigning property rights or wages to collect medical debt. A day before the Toledo City Council voted, 72 percent of Arizona voters voted to lower interest rates for medical loans and increase protections for borrowers, even though a judge blocked part of the measure.

Reducing medical debt could be a “game changer” for some, but governments must also address the causes of medical debt, including high costs and poor health, said Wesley Yen, an associate professor of economics at UCLA. Includes limited access to insurance.

In partnership with RIP Medical Debt, Yin is studying how the group’s work affects people’s livelihoods. “I believe it has a positive impact economically, but it may be less than the value of the debt that is being forgiven,” he said.

Debt reduction is low-hanging fruit, said Daniel Skinner, a professor of health policy at Ohio University in Athens, noting that the average medical debt is in the hundreds, if not tens of thousands, of dollars.

“We need to control drug costs,” Skinner said. I’m all for what Toledo is doing. I’m all for what Cook County and now New Orleans are doing, but at the end of the day, we can’t go back and do it every other year. This is not a good policy, it is not effective.”

Supporters of debt relief plans agree that much remains to be done.

RIP Medical Debt CEO Alison Sesso said an important part of the group’s work was continuing the conversation about how the health care system is changing.

In the past two years, RIP Medical Debt has placed an increased emphasis on buying debt directly from hospitals and health systems before going to collectors. Sisso said he wanted to speak directly to the group

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