Relieving the growing burden of medical debt

July 11, 2024 1:19 pm

The Centers for Medicare and Medicaid Services proposed payment updates for hospitals and physicians. House appropriators advanced legislation to fund the federal health department next year. But first …

State and local governments are buying up — and retiring — residents’ medical debt.

Medical debt is a growing burden for millions of people around the country, from parents in Illinois to immigrants in Colorado to residents of the “Diabetes Belt” across the South, and it’s now being recognized as a health-care problem. People often forgo care or prescriptions if they have debt, according to a KFF Health News investigation, and the psychological toll can be steep, too.

The Biden administration proposed barring medical debt from credit reports. This morning, Senate Health Committee Chair Bernie Sanders (I-Vt.) will convene a hearing in D.C. on medical debt.

Now local governments are looking at how they can assist residents by buying up medical debt on the cheap and retiring it.

Under a measure the Los Angeles County Board of Supervisors approved unanimously last month, the county will enter into a pilot program with Undue Medical Debt (previously known as RIP Medical Debt), a national organization that turns the debt collection process on its head. Instead of buying outstanding debt from hospitals and pursuing patients for payment, as commercial debt collectors do, Undue Medical Debt looks to buy debt, usually for pennies on the dollar, then retire it.

Los Angeles County’s $5 million investment is expected to allow Undue Medical Debt to help 150,000 low-income residents and eliminate $500 million in debt. It’s one component of the county’s larger medical debt plan, which includes tracking hospitals’ role in feeding the $2.9 billion problem, boosting bill retirement for low-income patients and monitoring debt collection practices.