This Midwestern City Plans to Wipe Out Residents’ Medical Debt
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The new program follows a similar one launched in Cook County, Illinois earlier this year.
As the cost of living soars nationwide, one Midwest city is partnering with a county government to offer residents medical debt relief to the tune of hundreds of millions of dollars.
Toledo, Ohio, plans to use $800,000 in American Rescue Plan Act funds to fund the program, according to City Councilperson Michele Grim. Lucas County, where Toledo is located, also pledged to contribute matching funds to the program for a total of $1.6 million.
The city and county are working with RIP Medical Debt, a national charity that typically uses donations to purchase medical debt at steep discounts. A $100 donation can cancel up to $10,000 in medical debt, according to the organization’s website.
The money from Toledo and the county could cancel up to $240 million in medical debt for 41,000 Lucas County residents, said Grim, who spearheaded the measure. The city’s allocation will support only Toledo residents, while the county’s will be distributed countywide. She said Toledo is the first city to wipe out medical debt on a community scale.
In developing the program, Grim said she was motivated by the economic effects of the Covid-19 pandemic and inflation, adding that Toledans need financial relief where they can get it.
“With a 1 to 100 return on investment, I can't think of a simpler way to invest our American Rescue Plan dollars than to cancel citizens' medical debt,” Grim told Route Fifty in an email.
According to data from The Urban Institute, approximately 18% of Lucas County residents hold medical debt with the median amount in collections sitting at $662. Those figures are greater in communities of color, where 26% of residents have debt in collections with a median amount of $812.
Medical debt is an issue that goes far beyond Lucas County. Earlier this year, the Kaiser Family Foundation published a report that found nearly a quarter of adults are saddled with medical or dental bills that are past due or they cannot pay. People of color, women, parents, and people who are uninsured are those who are most likely to hold health care debt, according to the report.
A RIP spokesperson said the organization has heard from municipalities across the country that are “intrigued and excited” by this kind of initiative and the debt-relief model appears to be garnering more interest.
Toledo’s debt-relief program was inspired by a similar initiative in Cook County, Illinois, Grim said. There, the county is working with RIP and using $12 million in federal pandemic aid to pay off hundreds of millions in residents’ medical debt.
Toledo’s plan has been in the works for about six months, and the city approved the plan earlier this month, Grim said.
Once both the city and the county have signed contracts with RIP, the nonprofit will begin to negotiate with hospitals about purchasing debt.
Residents do not need to fill out an application to enroll in the program, Grim said. Once hospitals decide whether they will work with RIP, people who make up to 400% of the federal poverty level and have debt they are unable to pay will be enrolled. If their debt is canceled by RIP, residents will be informed by letter.
Molly Bolan is the assistant editor for Route Fifty.
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