Committee Approves Medical Debt Relief

Hospital waiting area. (Public Domain)

Sup. Shawn Rolland‘s plan to erase $153 million worth of medical debt in Milwaukee County cleared the board’s powerful Committee on Finance Thursday.

The plan is to use $1.6 million in funding from the county’s allocation of federal stimulus funds to purchase and cancel approximately $153 million in debt held by Milwaukee County residents. To do this the county would partner with RIP Medical Debt, a New York-based non-profit that purchases bundles of debt for the purpose of canceling it.

David Eager, an ambassador for RIP Medical Debt and a former health system CFO, said the non-profit uses two primary criteria for finding debt to abolish. The first is that it targets county residents with medical debt where the household income is at or below 400% of the federal poverty line. For a single person, this is approximately $55,000 and for a family of four, $110,000, he said. The second is that anyone whose debt is equivalent to 5% or more of their household income is targeted for relief.

RIP Medical Debt was founded by two former debt collection executives, Jerry Ashton and Craig Antico. To date RIP Medical Debt has abolished more than $8 billion in medical debt across the U.S., according to the non-profit.

Medical debt is the leading cause of bankruptcy in the U.S. and it is correlated to worse health outcomes, as people choose not to access health care for fear of racking up greater medical bills, Eager said.

Relieving the financial burden of medical debt is one of the goals of the project, Rolland said. “The other is making people feel unafraid to go and see their doctor.”

Legislation Paired With Medicaid Program

Rolland amended his legislation at committee, inserting new language that would pair the medical debt project with another county initiative that would pay insurance premiums for county residents who are kicked off of Medicaid.

The program would offer an additional health insurance subsidy to residents whose income falls between 101% and 138% of the federal poverty line, said Steve Gorodetskiy, Strategic Initiatives Director for the county’s Department of Health and Human Services. It would cover plans purchased on the federal Affordable Care Act insurance marketplace.

In May, the federal emergency declaration that allowed residents to remain on Medicaid without enrolling will expire, which could cause as many as 90,000 Milwaukee County residents to lose Medicaid coverage between June 2023 and June 2024, Gorodetskiy said.

The committee approved adding the Medicaid subsidy program to Rolland’s debt relief resolution. The two proposals will be voted on by the full board as a single piece of legislation.

Supervisors Try To Tweak Debt Relief Program

Three supervisors sponsored two amendments to Rolland’s legislation, attempting to make changes to the proposed medical debt program.

The first amendment, by Supervisors Juan Miguel Martinez and Ryan Clancy, would have stripped $500,000 from the project, reducing the amount of debt that the county could abolish by approximately $50 million.

The county would instead use the $500,000 to create a $300,000 legal fund for medical debt-related lawsuits, a $100,000 expenditure for “navigating health care financing options” and another $100,000 for “outreach and community education efforts… to prevent medical debt and promote health equity.”

The amendment also sought to condition the county’s purchase of medical debt, requiring “commitments from each hospital to reduce lawsuits and credit reporting for patients and improve financial assistance and patient benefit assistance programs.” The amendment did not specify a threshold for a reduction of lawsuits and credit reporting, or financial assistance, that would allow the county to move forward with an attempt to purchase medical debt from the health care systems at pennies on the dollar — assuming the systems agreed to the condition in the first place.

Another amendment, authored by Sup. Peter Burgelis, would have prevented any funds from being used on debt that is at least five years old and less than $500. Burgelis said he wrote the amendment because debt held in collection is removed from credit reports after seven years and that debt relief would be most impactful for those with more than $500 in debt.

Eager noted that typically medical debt of $500 or less was physician debt — given the high cost of health system bills  — and that such debt can dissuade people from accessing primary care; and even after being removed from a credit report the debt still exists and is legally owed. “Open disclosure, if this amendment is passed, [RIP Medical Debt] would try to look at, ourselves, trying to abolish, find other sources to abolish that debt,” Eager said. “But it would create a challenge for us, mechanically, to try to make that happen.”

“This is somewhat of a delicate dance we’re doing,” Rolland said. “We are one part of this equation, the medical systems are the other part of this equation.”

Rolland told his colleagues he was concerned that adding any additional complexity to the project could cause the healthcare systems to walk away from project.

Ultimately, both amendments were voted down by the committee.