A debt collector-turned-philanthropist has bought $6.7 billion worth of medical debt on secondary markets — where hospitals sell debt for pennies on the dollar. But instead of profiting by collecting on that debt, the nonprofit has relieved 3.6 million people of the weight of their hospital bills.
A 2020 University of Minneapolis study examined medical debt and its racial distribution. Researchers found that examining debt as a function of wealth provided insights into structural racism—the policies and practices that produce racial disparities, Brookings reported.
In Minnesota, for example, Black people make up 7 percent of the population but account for 25 percent of all covid-19 infections as of the summer of 2020. There is a causal relationship between wealth and quality of life outcomes, including health, according to the study.
“We introduce evidence that by reducing the amount of medical debt held by all households, we are disproportionately helping Black people,” wrote Brookings fellow Andre M. Perry, along with co-authors Joia Crear-Perry, Carl Romer, and Nana Adjeiwaa-Man.
Former debt collectors Craig Antico and Jerry Ashton had careers chasing down patients who couldn’t afford their bills. Ashton had a change of heart after meeting Occupy Wall Street activists in 2011 who talked to him about how to help relieve Americans’ debt burden, NPR reported.
After helping Occupy Wall Street activists buy debt for a few years, Antico and Ashton launched RIP Medical Debt in 2014 and started raising money from donors to buy up debt on secondary markets.
“As a bill collector collecting millions of dollars in medical-associated bills in my career, now all of a sudden I’m reformed: I’m a predatory giver,” Ashton said in a video by Freethink, a new media journalism site.
To date, RIP has bought $6.7 billion in unpaid debt just like any other collection company would but instead of profiting, it sent out notices to 3.6 million people saying that their unpaid debt has been relieved.
The group says retiring $100 in debt costs an average of $1.
RIP makes these payments randomly depending on which hospitals’ debts are available for purchase, and is expanding the pool of those eligible for relief to people who make as much as four times the federal poverty level, up from twice the poverty level.
Inflation and job losses are putting stress on more families, Sesso said.
RIP has seen a surge in recent donations including $50 million from MacKenzie Scott. New regulations mean the company can buy loans directly from hospitals instead of just on the secondary market, expanding its access to the debt, NPR reported.
RIP’s expansion is nothing to celebrate, Sesso said. It means that millions of people are victims of a U.S. insurance and health care system that is too expensive. More than half of U.S. adults say they’ve gone into debt in the past five years because of medical or dental bills, according to a KFF poll. A quarter with health care debt owe more than $5,000 and one in five say they don’t expect to ever pay it off.
Photo by Piron Guillaume on Unsplash, https://unsplash.com/@gpiron?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText