The governor’s office is partnering with RIP Medical Debt, a nonprofit organization that aims to settle medical debt for individuals. (Photo by Marnie Jordan/Cronkite News)
PHOENIX — On March 4, the Governor’s Office announced that the state of Arizona will cancel the debt of up to 1 million Arizonans with RIP Medical, a national nonprofit organization dedicated to eliminating medical debt for Americans. announced a partnership with Debt.
In making the announcement, Gov. Katie Hobbs said the program would help working Arizonans who have incurred debt due to cancer treatment, life-saving surgeries or accidents “through no fault of their own.”
Arizonans had more than $2.4 billion in medical debt in 2020, according to the Consumer Financial Protection Bureau. The RIP medical debt program will forgive up to $2 billion of that debt, according to the governor’s office.
An analysis of government data by the KFF-Peterson Health System Tracker found that 8.2% of Arizonans, or about 460,000 people, had medical debt in a given year. This data was compiled from the U.S. Census Bureau’s Income and Program Participation Survey from 2019 to 2021.
And the nonprofit Urban Institute reports that 12 percent of the medical debt owed by Arizonans is spent in the collection process. That jumps to 16% in communities of color. The median medical debt for communities of color in Arizona is $774, compared to $686 for white Arizonans, according to the institute.
Hobbs plans to use up to $30 million from the federal American Rescue Plan Act, which will allow RIP Medical Debt to “purchase and forgive billions of dollars in medical debt held by health care providers.” According to the Urban Institute, American Rescue Plan funding must be spent by December 31, 2026, when the law expires.
The program is available to Arizona residents who have incomes up to four times the current federal poverty level or who owe more than 5 percent of their estimated household income, according to the governor’s office.
No one is applying to this program. The nonprofit analyzes the debt portfolios of hospitals and other health care providers and identifies individual accounts for coverage. Those who will benefit from debt forgiveness will then be notified.
Healthcare providers are required to sign non-disclosure agreements and business associate agreements to protect patient health information submitted to RIP Medical Debt for analysis. The hospital decides whether to sell or donate the patient’s debt to her RIP Medical Debt at a discounted rate.
“We’re very excited to be able to help individuals with medical debt,” said Daniel Lempert, vice president of communications and marketing for RIP Medical Debt, a nonprofit organization dedicated to settling medical debt for individuals. (Photo by Jack Orleans/Cronkite News)
“For every $1 of ARPA funds held by the government, on average, $100 of medical debt is erased,” said Daniel Lempert, vice president of communications and marketing at RIP Medical Debt. said.
Misty Rowe is from Arizona and had her medical debt canceled by RIP Medical Debt before the current deal was signed. Her debt was caused by complications during the birth of her second child, but the child did not survive.
Lowe said she suffers from a condition known as HELLP syndrome. This is a set of symptoms that occur in pre-eclampsia and threaten the health of both mother and baby. HELLP is an acronym for hemolysis (destruction of red blood cells), elevated liver enzymes, and low platelet count.
According to a study published in the Journal of Prenatal Medicine, women with HELLP have a mortality rate of up to 24% and a perinatal mortality rate of up to 37%.
Lowe said her symptoms started with pain in her upper abdomen, which she mistook for gas. As her symptoms worsened, she was taken from hospital to hospital by ambulance and was finally able to receive treatment at a third hospital, she said.
“Sweetheart, you’re very sick. I’ll do my best to keep you here without vegetables, but you have to work with me,” one of the nurses told her. she remembers.
When the ordeal was over, she found herself more than $7,000 in debt for hospital and ambulance bills. She said it damaged her credit and made it difficult for her to rent or buy a home.
“Medical debt is uncalled for. I didn’t wake up in the morning and think, ‘Today I’m going to have $7,000 in medical debt,'” she said.
According to the American Journal of Public Health, health insurance does not protect Arizonans from medical debt. Health insurance rarely fully compensates for financial losses due to illness or injury.
Misty Rowe had approximately $7,000 in medical debt before it was settled by RIP Medical Debt. (Photo by Jack Orleans/Cronkite News)
According to the American Journal of Public Health, the percentage of people who have difficulty paying medical bills, have medical debt, or both increased from 34% in 2005 to 41% in 2007. Repaying medical bills can be more difficult than other types of debt because an illness or injury limits your ability to work.
Lowe said debt collectors are relentlessly pursuing her and she won’t compromise on how to repay her debt.
“They don’t want to give you time off. There were times when I thought, ‘What if I pay this much and then cancel the debt?’ And they’re like, ‘No, no, we want the full amount,'” she said.
In addition to contracting with state and local governments, RIP Medical Debt works by acquiring debt from medical providers and debt collection agencies, sometimes at deep discounts, and using private donations to cancel the debt. I am. Lempert said Rowe’s debt was paid from a church fundraiser at Redemption Church Gateway, now known as Ironwood Church in Mesa.
Some hospitals refuse to sell medical debt due to predatory debt collection practices. But Lempert said those hospitals sometimes sell their bonds to RIP Medical Debt once they understand how the nonprofit operates.
“We’re getting over the hurdle of explaining that we’re different than commercial collection agencies,” Lempert said.
Lempert said local governments in Toledo, Ohio, and Cook County, Illinois already have similar programs in place.
He emphasizes that while nonprofits exist to help people, they are not a substitute for proper health care reform.
“You can never point the finger at a health care provider or an insurance company, right? There are bad actors out there, but in most cases, the whole system needs to be overhauled,” Lempert said.
