New York Organization Pays Off $1.5 Million in Medical Debt

By Zachary Stieber

Nearly 1,300 people had their medical debt paid off thanks to an upstate New York group called RIP Medical Debt.

The people who had their debt paid off received mail from the group informing them they no longer needed to pay.

Judith Jones and Carolyn Kenyon, both of Ithaca, are members of the Finger Lakes chapter of the Campaign for New York Health.

The pair discovered the nonprofit, which buys medical debt for pennies on the dollar and forgives it, and decided to launch a fundraiser.

“The further we got into it, the more we realized what a serious issue medical debt is,” Jones, a retired chemist, told the Albany Times-Union. “When you start to learn how bad the problem is, it makes you want to do more.”

In the end, the fundraiser garnered $12,500. Thanks to the low cost of the bundled medical debt portfolios, the money was used to pay off $1.5 million in medical debt. Before RIP Medical Debt bought the portfolios, the medical bills passed through multiple collection agencies and the chances of collecting the debts was deemed dubious.

The fundraiser wiped out the debt of some 1,284 people.

Daniel Lempert, a spokesman for RIP Medical Debt, said that many people who get the letter from the nonprofit think they’re fake.

“We really just want people to be aware of what a terrible problem medical debt is,” Lempert said. “And we want recipients of these letters to know this debt is finally off their credit report.”

Nurse in file photo
A nurse at a hospital in Oakland, California in a Nov. 13, 2017 file photo. (AP/Eric Risberg)

Medical Debt Statistics

Medical debt can disrupt lives for years, with more than a quarter of adults in the United States struggling to pay their medical bills, according to the Kaiser Family Foundation. That includes 53 percent of people without health insurance and 20 percent of those with health insurance, according to a survey the foundation conducted in 2016.

Of people struggling with medical bills, 61 percent said the problems led to difficulty in paying other bills as a result of the debt.

Medical expenses account for roughly four percent of bankruptcies among nonelderly adults in the United States, researchers with the Massachusetts Institute of Technology (MIT) said in a study published in March.

Researchers said the study’s findings showed that medical bills don’t often cause bankruptcies but do produce a range of problems for people.

“It doesn’t mean there aren’t really adverse economic consequences from adverse health,” MIT economist Amy Finkelstein, co-author of the paper outlining the findings, said in a statement. “It just turns out they’re not [strictly] about bankruptcy. They’re much more about lost employment and earnings.”

The study’s main source of data was hospitalization records from the years 2003 through 2007 and credit reports from 2002 through 2011 in California for people 26 or older. The records included approximately 780,000 people with health insurance and 150,000 people without insurance.

And the researchers noted that medically caused bankruptcies among the elderly are quite low, since they’re likely to be retired and have Medicare.

“We suspect what’s driving the [level of] bankruptcy we find is the fact that some people lose their job because of adverse health, and in turn that causes them to go bankrupt,” Finkelstein said. “That’s just not going to [apply to] the elderly, because they’re not working, so they don’t have the labor market risk from poor health.”