PoliticsHealth Care


NYC program will erase $2 billion of medical debt for some residents

New York is working with a nonprofit organization called RIP Medical Debt, which buys up delinquent medical accounts.
Posted at 6:31 PM, Jan 23, 2024

Half a million New York City residents could see their medical bills forgiven.

"A burden that is impacting not only a large number of New Yorkers but Americans — medical debt is real and you do not make a choice," said New York City Mayor Eric Adams.

A new city program plans to erase more than $2 billion in medical bills for some of New York's neediest residents.

"Working-class families often have to choose between paying their medical bills or some of the basic essentials that they need to go through life," said Adams.

New York is working with a nonprofit organization called RIP Medical Debt, which buys up delinquent medical accounts for pennies on the dollar and then forgives the debt.

"In the United States of America, the number one cause of bankruptcy is medical debt," said Allison Sesso, president and CEO of RIP Medical Debt.

Sesso said there's no need for people in debt to apply.

"We identify all the people that are qualified, which is usually a very high percentage of the portfolio," said Sesso."

It includes residents with incomes of up to 400% of current federal poverty guidelines, or people with medical debt loads that are more than 5% of their annual incomes.

A 2019 study published in the American Journal Of Public Health found that 66.5% of personal bankruptcy filings over a three-year period were tied to medical debt.

"What we're seeing at RIP Medical Debt is a lot of the people we're helping do have insurance, but the insurance is expecting them to pay an out-of-pocket cost that is just beyond their means," added Sesso.

A 2023 survey by RIP found more than 4 in 10 adults said they delayed medical care because they did not want to go further into debt.

Most medical debt is sold to collectors for pennies on the dollar.

Collectors then pressure patients to pay back as much as possible over the cost of what they paid for their debt.

Under this new plan, New York City will work with RIP to buy up medical debt and then forgive what's owed.

So, if a low-income person owes $1,000, the city might buy the debt for $100, and then waive repayment.

"The prices are depressed, which is why we can take $1.00 and turn it into $100 of medical debt relief," said Sesso.

Other cities have adopted similar models, including Cleveland and New Orleans.

Under the program, New York City will spend $18 million over three years.