Kalamazoo County Budget Pays RIP Medical Debt To Extinguish Residents' Medical Debts

Oakland County is following Kalamazoo County:

https://www.mlive.com/news/2023/10/oakland-county-plans-on-using-2m-in-federal-aid-to-cover-medical-debt-for-residents.html

Oakland County plans on using $2M in federal aid to cover medical debt for residents
By Matt Durr - October 20, 2023

OAKLAND COUNTY, MI -- Officials in Oakland County say they plan on using a $2 million federal grant to pay off medical debt for county residents, according to the Associated Press. The county will work with the national nonprofit RIP Medical Debt to purchase medical debt for people who can’t afford to pay it themselves.

Oakland County Executive Dave Coulter said that as much as $200 million in debt could be wiped off the books for county residents if the health care providers agree to accept less money to settle the debts. Coulter went on to say that he wants the federal aid “to be transformational.”

The funding comes from a government program that aims to stimulate the economy and improve public health in the aftermath of the COIVD-19 pandemic.

RIP Medical Debt will work with local health care providers in the county to determine which individuals fit the criteria for the program. Residents will not be able to apply for the program, but will be notified if any [p]art of the debt has been settled as part of the plan.

Now Wayne County, with the most expensive medical debt cancellation program yet attempted in Michigan:

https://www.freep.com/story/news/local/michigan/wayne/2024/03/13/a-wayne-county-program-aims-to-wipe-away-up-to-700m-in-medical-debt/72941740007/

Wayne County seeks to wipe away up to $700M in medical debt for 300,000 residents
By Nushrat Rahman - March 13, 2024

A new program aims to relieve medical debt for up to 300,000 Wayne County residents.

The county is partnering with the national nonprofit RIP Medical Debt to eliminate as much as $700 million in medical debt for those who are eligible. Last week, Wayne County Commissioners approved a contract to work with the organization.

"We just believe that you shouldn't be strapped with a debt that will ruin your credit, will take away your financial opportunities and create the kind of anxiety that medical debt does for too many people," said Dr. Abdul El-Sayed, director of Wayne County’s Department of Health, Human, and Veterans Services.

One in 12 American adults — or 12 million people — owe medical debt, according to an analysis from the Peterson Center on Healthcare and KFF. Despite the vast majority of the population having some form of health insurance, medical debt is an ongoing problem, forcing people to cut back on how much they spend on food, clothing and household items, researchers said. The report found that about 690,000 people in Michigan, or 9% of adults on average, reported having medical debt in a given year.

About 13% of people with a credit bureau record in Wayne County have medical debt in collections, according to the Urban Institute. The median medical debt in collections is $397.

Detroiter Kyra Taylor, who was diagnosed with diabetes at 10 and has received kidney and pancreas transplants, began seeing her medical bills pile up from emergency room visits, check ups, medication and specialists after she turned 18 and said her insurance was cut off.

Taylor was working at Subway making $700 every two weeks and paying for insulin, while dealing with seizures, hair loss and feeling frail. The highest bill her mother saw was around $50,000, she said. Debt collectors would hound her mother to pay the medical bill even while Taylor was in the hospital. She would come home to be served papers. When she saw a letter from RIP, she thought it was another bill, but it ended up being a major stress relief. In 2019, RIP wiped away most of her medical debt, she said.

"I felt lighter. I was able to go back to the doctor and know that I had a clean slate," Taylor, 35, said.

Here's a rundown of what to know about the first-of-its-kind program in Wayne County:

How the program works

Since 2014, RIP has relieved more than $10.4 billion in medical debt for 7 million families. The nonprofit uses donations to buy medical debt in bulk for "pennies on the dollar" from hospitals, physician practices and debt collectors, according to the organization. Once the group owns the debt, it notifies individuals whose debt it purchased that their medical debt will be erased. One dollar, on average, gets rid of $100 in medical debt, according to RIP.

"The medical system is increasingly complicated for individuals to navigate and so, we're trying to remove this debt for individuals, that really was no fault of their own," said RIP Medical Debt CEO and President Allison Sesso.

The Wayne County program will initially be funded by a $5 million contract for two years, with an optional two year extension, El-Sayed said. Funding comes from Wayne County's indigent health fund and dollars leveraged through the county's use of the pandemic-era American Rescue Plan Act, he said.

Last year, Oakland County and Kalamazoo County partnered with RIP to ease medical debt for thousands of residents, and the relief efforts are still in the works. RIP worked with Access Health in Muskegon to provide medical debt relief. The nonprofit has also worked with local governments in Ohio, New York and Illinois.

Who qualifies

The program is for Wayne County residents who earn less than 400% of the federal poverty level, or $103,280 for a family of three, or whose debt is greater than 5% of their annual income.

People do not need to apply for the program. Instead RIP will work with health care providers to buy the debt and identify who qualifies. Then, the nonprofit will send letters to people letting them know their medical debt has been wiped away.

"They basically get their financial lives back for that decision that they made for fear of losing their actual lives," El-Sayed said.

What residents can expect

Those who qualify for the program will receive a letter from RIP Medical Debt letting them know their medical debt has been erased. RIP needs to finalize a contract with Wayne County and work with health care providers — where it buys debt from — first and that will take at least six months.

"This is a multi-year endeavor, so it's gonna take some time," Sesso said.

$ 27 million is a bit less than $ 700 million:

https://www.freep.com/story/news/local/michigan/wayne/2024/12/18/wayne-county-erases-27-million-medical-debt-residents/77066572007/

Wayne County eliminates $27 million debt for more than 46,000 residents
By Dana Afana - December 18, 2024

Wayne County announced Wednesday that $27 million in outstanding medical debt will be erased for more than 46,000 residents.

The county's Department of Health, Human & Veteran Services said that the debt came from a local hospital, which "wishes to remain anonymous but is committed to community benefit and making health care accessible," according to a news release.

“Since we first announced this new program in March of this year, a program designed to wipe out more than $700 million in medical debt, I am extremely pleased to see the program’s success thus far in helping so many of our residents in need," Wayne County Executive Warren Evans said in a news release. "These resources will help to eliminate the stress they have been under as they juggle how to pay for crushing hospital bills while keeping the lights on and putting food on the table at the same time.”

Maysaa Bazzi, 28, of Dearborn works for Wayne County Health department and prepares COVID-19 Pfizer vaccines for the nurses to administer at the Wayne County Community College District Downriver Campus in Taylor on Saturday, Feb. 6, 2021.
Wayne County is working with Undue Medical Debt, a national nonprofit that acquires medical debts from those who are unable to pay. Patients who qualify must live in Wayne County and must have income no more than four times the federal poverty level, or have medical debt that equals 5% or more of their annual income, according to the county. The nonprofit can only acquire qualifying medical debts from providers who agree to be partners, such as hospitals and physicians’ groups.

“With this program, we are doing our part to address the way our national health care affordability crisis affects Wayne County residents. Medical debt is a financial anchor on too many families, often forcing them to choose basic everyday needs or being forced to pay medical bills. We are proud to work with Undue Medical Debt to help bring a measure of relief to vulnerable families throughout Wayne County,” said Dr. Abdul El-Sayed, Wayne County health director and director of Health, Human & Veterans Services.

Those receiving debt relief will receive an informational letter in the mail from Undue Medical Debt this week, signed by Evans, detailing which debts have been erased. No action is required by recipients.

The county invested $5 million in this initative with the goal of eliminating $700 million in medical debt. An additional $2 million could be added in the future if needed, according to the county.

More information is available online or anyone can email Medicaldebtrelief@waynecountymi.gov.

Oakland County also announced Tuesday that more than 14,000 residents would receive letters notifying them that $9.1 million in medical debt has been eliminated.

“This is helping individuals and families pay off their medical debt and rehabilitate their credit scores, giving people the freedom to fully participate economically and live their best lives,” Oakland County Executive David Coulter said in a news release.

Besides the obvious negative economic impacts, this is kind of creepy.   

Residents don't have to take any action whatsoever for qualifying debt to be wiped out.  This means these companies that acquire the debt have access to a lot of personal info - patient's name and contact info, amount of debt, income (for determining eligibility).  I'm not so sure I'm thrilled with that.

@pattie creepy is a great word. 

Given the choice of two baskets, free responsible citizenship versus totalitarianism, there's not much doubt where this process lands.

Charity practiced well involves the individual - either debtor or debt-holder. 

https://www.freep.com/story/money/business/2025/02/09/medical-debt-pay-program-wayne-county/78054844007/

Program to erase medical debt in Wayne Co. shows insured workers may be struggling most
By JC ReindlJC Reindl - February 9, 2025

An ongoing effort to wipe out up to $700 million in medical debt for Wayne County residents has made a discovery some may find surprising.

Those most in need of medical debt relief were not the poorest patients. Rather, it was insured people in the middle and lower-middle class .

That was one key finding by the nonprofit group called Undue Medical Debt, previously known as R.I.P. Medical Debt, which is working with the county to erase delinquent debt that county residents owe to hospitals and other medical providers.

Wayne County Health Director Dr. Abdul El-Sayed said the group is finding that most of the debt is in the form of unpaid health insurance deductibles or copays that the patients couldn't meet.

Because many low-income Michiganders now qualify for Medicaid, which generally has no deductibles and only minimal copays, they oftentimes avoid significant medical debt.

But a working-class person who has commercial health insurance through their job might, for instance, struggle to meet their plan's $2,000 deductible, or how much they must pay out-of-pocket before the insurance kicks in.

Dr. Abdul[rahmen M.] El-Sayed speaks to the Sterling Heights Democratic Club in Sterling Heights on Monday, March 26, 2018.
"The truth is that we have a program to provide health care to the poorest people, and that is Medicaid. So oftentimes they are not the ones who are being hit hardest by debt," El-Sayed said.

"Increasingly, we’re seeing more and more debt among people who are ostensibly insured, because deductibles have gone higher and higher," he said. "The average family of four is facing a deductible now of around $4,000.”

Wayne County last year signed a two-year contract with New York-based Undue Medical Debt to extinguish residents' medical debt, using $5 million from the federal American Rescue Plan of 2021 and the county's indigent health fund.

Begun in 2014 by former debt collection executives, Undue Medical Debt has partnered with a growing list of local governments nationwide, including Oakland County, the city of Toledo, Ohio, and the state of Connecticut. Much of the nonprofit's funding has come from philanthropist MacKenzie Scott, the former wife of Amazon founder Jeff Bezos, who has reportedly donated $130 million to the group since 2020.

The program tries to buy debt from medical providers that is up to seven years old and for pennies on the dollar.

Ordinarily, when a patient's bill goes unpaid for over a year, some hospitals will engage with debt collection agencies who pursue the patient and typically get a percentage of whatever they manage to collect.

$27 million in medical debt wiped out

To be eligible for debt erasure under the program, Wayne County residents must be earning at or below 400% of the federal poverty level — currently $15,650 for an individual or $32,150 for a household of four — or have debt that exceeds 5% of their income.

Shortly before Christmas last year, the county announced the program's initial results: Undue Medical Debt successfully wiped out $27 million in debt for over 46,000 county residents. All of the debt was from just one medical provider, a local hospital, which asked to stay anonymous in exchange for program participation.

Under the program, Undue Medical Debt browses a provider's records for unpaid patient bills and determines which residents would be eligible for the debt relief. The medical providers don't have to be in Wayne County, but the patients must be county residents.

Once the group has bought and extinguished the debt, it sends patients a notice of the good news in the mail.

However, because of how the program works, residents cannot reach out first to get included in it. They just need to wait and see whether the program takes on their debt.

Ruth Lande, a vice president of provider relations with Undue Medical Debt, said it does take time for the organization to negotiate with medical providers. There are legally required privacy disclosure steps involved, she said, and not all providers are familiar with Undue's program and may require some initial cajoling.

"One of the first things that happens with a lot of places — not every place — is ‘What? We don’t sell our debt.’ And then I need to keep the conversation going, because then I say ‘That’s great. But we’re different.’

Lande said it also can sometimes can be a challenge to get any response from a provider, as hospital administrators tend to be busy people.

“It’s mostly kind of getting people’s attention and getting people used to it," she said. "Once people start working with us, they really enjoy it.”

Medical providers who do participate and sell their debt are also required to contact credit reporting bureaus and report how the patients' debt is now gone.

Lande noted how an in-depth report on hospital collection rates by an accounting and consulting firm, Crowe, found that "bad debt" — unpaid patient bills — used to be mostly generated by uninsured patients, but by 2021, it was primarily from unpaid deductibles or other "self-pay-after-insurance" bills given to patients.

"So there is no doubt that the increase in out-of-pocket for insured folks, whether it’s coinsurance or high-deductibles, is just causing so much debt," she said.

The idea for Wayne County to take part in the program came after El-Sayed shared details about it with County Executive Warren Evans.

“We realized we could get rid of about $100 of medical debt for $1 invested," Evans said, "which seemed to me to be a pretty good space for us to play in for awhile and see what we could do."

Evans said he understands that stacks of medical bills can be a major source of stress for people, and he is glad the county has a way to help.

“People hesitate to go to additional medical treatment sometimes when they’re carrying the debt, and that’s the part that you worry about the most," he said. "We think that we have 300,000 families in Wayne County in total who would fall in this group, so that’s a pretty good percentage of the population.”

The Consumer Financial Protection Bureau finalized a rule last month in the final days of the Biden administration that would prohibit medical debt from being included in a person's credit report.

The bureau said at the time that it anticipated the rule taking effect March 17. However, the current status was not available and there have been media reports that new Treasury Secretary Scott Bessent, who also is acting director of the Consumer Financial Protection Bureau, may seek to roll back the medical debt rule before it takes effect.

Previously, the three major credit bureaus in 2023 voluntarily removed medical collection debt of under $500 from credit reports.