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

[Northeast Agent]

[EXTERNAL LINK] - Medical Debt Is Being Erased in Ohio and Illinois. Is Your Town Next? - NewsBreak

Officials in New Orleans and Toledo, Ohio, are finalizing contracts so that tens of thousands of residents can receive a similar letter in the coming year. In Pittsburgh on Dec. 19, the City Council approved a budget that would include $1 million for medical debt relief.

More local governments are likely to follow as county executives and city councils embrace a new strategy to address the high cost of health care. They are partnering with RIP Medical Debt, a nonprofit that aims to abolish medical debt by buying it from hospitals, health systems and collections agencies at a steep discount.

 

[somarco]

Interesting . . . only available in a few geographic areas at this time but seems like a good idea.

[EXTERNAL LINK] - Debt Relief Campaigns - RIP Medical Debt

 

[Allen Trent]

[EXTERNAL LINK] - Medical Debt Is Being Erased in Ohio and Illinois. Is Your Town Next? - NewsBreak

Officials in New Orleans and Toledo, Ohio, are finalizing contracts so that tens of thousands of residents can receive a similar letter in the coming year. In Pittsburgh on Dec. 19, the City Council approved a budget that would include $1 million for medical debt relief.

More local governments are likely to follow as county executives and city councils embrace a new strategy to address the high cost of health care. They are partnering with RIP Medical Debt, a nonprofit that aims to abolish medical debt by buying it from hospitals, health systems and collections agencies at a steep discount.

Erased to me, means gone/elminated/poof. this sounds more like it being sold at a discount to purchasers of debt. If the person that created the debt doesnt pay it back & it is an asset of the purchaser, it wasnt "erased".

If other taxpayers will pay it, it will transferred. As long as it is all spelled out in the program & communicated like that, I have no problem as the elected officials work for the local voters & agree to provide the revenue for the elected officials to spend.

odd part is most healthcare systems are now for profit corporations, so not sure how municipalities are involved, unless it is the healthcare systems owned by the municipalities.

 

[somarco]

Erased to me, means gone/elminated/poof. this sounds more like it being sold at a discount to purchasers of debt. If the person that created the debt doesnt pay it back & it is an asset of the purchaser, it wasnt "erased".

It is transferred and also goes poof.

RIPmedicaldebt is a non-profit organization that relies on donations (not taxpayer funds) to perform their magic . . .

 

[scagnt83]

Its transferred (sold) to a non-profit at a steep discount. Then the non-profit "forgives" the debt.

Once the non-profit forgives the debt (pays it off via donations) then its erased off of the persons credit history.



I think they are no longer listing healthcare debts on credit reports nationwide now. But that doesnt mean they cant go after them legally for the debt... which is a really messed up dynamic imo.

 

[Allen Trent]

Its transferred (sold) to a non-profit at a steep discount. Then the non-profit "forgives" the debt.

Once the non-profit forgives the debt (pays it off via donations) then its erased off of the persons credit history.



I think they are no longer listing healthcare debts on credit reports nationwide now. But that doesnt mean they cant go after them legally for the debt... which is a really messed up dynamic imo.

very cool.

wonder why it has to be transferred/sold & why the non-profit couldnt just pay the healthcare a negotiated lower amount. Maybe some accounting that works better when done in large blocks.

good they are doing this now. Had to run fundraisers for a year for my brother in law going through cancer while in Pharmacy Doctorate program & fighting stage 4 melonoma. Ironcially, the hospital that did his residency & also some of his treatments wouldnt budge on how much he owed. Awesome though that he beat the melanoma & now after 15-20 years was even able to finally get some adequate life insurance. His type of cancer at the time was always thought to be re-occurring, so life carriers were unable to make offers until the last couple years even after decades after the cancer

 

[scagnt83]

very cool.

wonder why it has to be transferred/sold & why the non-profit couldnt just pay the healthcare a negotiated lower amount. Maybe some accounting that works better when done in large blocks.

good they are doing this now. Had to run fundraisers for a year for my brother in law going through cancer while in Pharmacy Doctorate program & fighting stage 4 melonoma. Ironcially, the hospital that did his residency & also some of his treatments wouldnt budge on how much he owed. Awesome though that he beat the melanoma & now after 15-20 years was even able to finally get some adequate life insurance. His type of cancer at the time was always thought to be re-occurring, so life carriers were unable to make offers until the last couple years even after decades after the cancer

The debt industry is weird. I unfortunately have too much experience dealing with them from my younger years.

You can settle credit card debt for crazy low amounts if you just wait a year or two. Especially if you made payments for a while... but even if you didnt, they will settle at very steep discounts after a long enough time. I once settled a credit card debt for 10% of the amount owed about 15 months after default. Most debt collectors buy credit card debt at 1% or 2% of the value of the debt... which means the credit card company is selling it at a 99%-98% discount.

Ive heard that medical debt sells for a bit more than credit cards, but its still under 10% and most likely under 5%.

But you hit the issue on the head, it only makes economic sense to do it in blocks. They can sell a huge block of debt at a 98% discount because its a single transaction. But if they have to speak to each debt holder and spend time dealing with them, suddenly they cant afford to discount the debt by 98%, they need more for the extra man hours.

Ive heard that some hospitals will negotiate debt, others wont. Same with doctors offices. Some just do not see the cost benefit of doing so on an individual basis. They feel it makes more sense to sell it off at steep discounts in blocks and let a different entity deal with the individuals.

Regarding the accounting, Id guess there is probably an enhanced benefit to selling the debt to a registered non-profit. They can obviously write the debt off and subtract a good bit of it from their taxable profits... but Id guess its even more if that discount is going towards a charity. So its a brilliant idea from an accounting standpoint if that is the case. Even if not, its still a great idea.

 

[scagnt83]

wonder why it has to be transferred/sold & why the non-profit couldnt just pay the healthcare a negotiated lower amount. Maybe some accounting that works better when done in large blocks.

Because they are transferring something of value to the non-profit, so its not just a write off, its a charitable contribution. Ownership of a block of debt is an asset that has a financial value to it. Accepting payment from a non-profit would not be considered a charitable donation by current tax codes to my knowledge. You have to actually give them something of value. Its all about the ownership of the asset.

 

[Allen Trent]

The debt industry is weird. I unfortunately have too much experience dealing with them from my younger years.

You can settle credit card debt for crazy low amounts if you just wait a year or two. Especially if you made payments for a while... but even if you didnt, they will settle at very steep discounts after a long enough time. I once settled a credit card debt for 10% of the amount owed about 15 months after default. Most debt collectors buy credit card debt at 1% or 2% of the value of the debt... which means the credit card company is selling it at a 99%-98% discount.

Ive heard that medical debt sells for a bit more than credit cards, but its still under 10% and most likely under 5%.

But you hit the issue on the head, it only makes economic sense to do it in blocks. They can sell a huge block of debt at a 98% discount because its a single transaction. But if they have to speak to each debt holder and spend time dealing with them, suddenly they cant afford to discount the debt by 98%, they need more for the extra man hours.

Ive heard that some hospitals will negotiate debt, others wont. Same with doctors offices. Some just do not see the cost benefit of doing so on an individual basis. They feel it makes more sense to sell it off at steep discounts in blocks and let a different entity deal with the individuals.

Regarding the accounting, Id guess there is probably an enhanced benefit to selling the debt to a registered non-profit. They can obviously write the debt off and subtract a good bit of it from their taxable profits... but Id guess its even more if that discount is going towards a charity. So its a brilliant idea from an accounting standpoint if that is the case. Even if not, its still a great idea.

for sure. I have a ton more sympathy for medical debt than some consumer debt situations that were mostly lifestyle creep & mismanagement

 

[scagnt83]

for sure. I have a ton more sympathy for medical debt than some consumer debt situations that were mostly lifestyle creep & mismanagement

Same here. I just spoke to an extended family member who is recovering from covid. No insurance and works hourly. After being out of work for 1 week, the employer is demanding they go to a dr and get a negative covid test before returning to work.... "company policy"... rapid test is specifically excluded from the company policy.

So essentially nobody who works there actually reports they had covid.... except she didnt know that yet since she was new. So after no income for a week, she had to pay $100 for a doctor visit, just to be able to go back to work.

Now the covid thing is new to our society...

But not getting paid while having to spend a large sum of money when sick, is not new to hourly workers and low income families in the richest nation on earth....