Gift of medical debt relief highlights ongoing crisis
Right after Christmas and just before the New Year, thousands of Los Angeles residents have received unexpected letters that miraculously lifted the weight of medical debt from their shoulders.
The more than $50,000 in donations collected from the congregation of Christian Assembly Church in the Los Angeles neighborhood of Eagle Rock was used to help buy about $5.3 million in medical debt, which can be purchased for pennies on the dollar. That means 5,555 low-income residents who live in surrounding neighborhoods no longer have to worry about debt they never expected to carry.
“For many people in our communities, medical debt is a crushing weight during a most challenging time in their life,” said Tom Hughes, co-lead pastor at Christian Assembly Church.
The congregation's act of kindness made headlines and national news, but it also cast a renewed spotlight on the rising cost of medical debt across the United States, and how it hurts and haunts Americans, even in California, where an estimated 93 percent of residents have health insurance coverage, according to the latest U.S. Census data.
"What we are noticing (among those in debt) is that there are three things that are high cost: cancer treatments, transplants, and addiction (treatment) and mental health," said Craig Antico, co-founder for RIP Medical Debt, which was launched in 2014. The New York-based nonprofit organization uses data analytics to find the medical debt of those most in need of relief. Donations such as those made by the Christian Assembly Church allows RIP to "buy debt in bundled portfolios, millions of dollars at a time at a fraction of the original cost," according to the organization.
"People across the country receive a letter that their debt is gone. No taxes. No penalties. Just like that, they’re free of medical debt," according to RIP.
So far, RIP says it has erased more than $1 billion in medical debts, for more than 480,000 individuals and families.
Antico said before he and co-founder Jerry Ashton created RIP, both were debt collectors. They knew the ins and outs of the job and it wasn't always a good feeling.
"You isolate yourself," Antico said. "You kind of distance yourself from the carnage. It wasn't until I saw this being done by another nonprofit, that I realized how much (debt forgiveness) was needed."
A number of factors contribute to the number of people who carry medical debt, Antico and others say, ranging from the rising cost of job-based healthcare, where most get coverage, to large surprise medical bills for those who are underinsured, to the low reserve many Americans have for unanticipated medical bills.
"It's going to get much worse, even though we have a very high employment rate and should be able to be resilient, but I doubt Americans are saving enough," Antico noted. "We're not just talking about the $500 or $1,000 bill. It's going to be a $5,000 bill."
The data back him up.
A 2007 survey from The Commonwealth Fund found that 41 percent of working-age Americans, or 72 million people, have medical bill problems or are paying off medical debt, up from 34 percent in 2005. That figure did not include another 7 million senior adults.
More than a decade later, the number of American adults who reported financial hardship in the last year nearly doubled, to 137 million, according to a 2019 study published in the Journal of General Internal Medicine.
"I define hardship as when you won't go to the hospital or you won't fill your prescription, because you're afraid," Antico said. "You're not paying your rent, your utilities. You're in survival mode. You've used all your savings. “There are no longer family and friends to offer support,” all because of medical debt.
"It's not like these people are slacking," he added. "They had insurance.”
The Affordable Care Act allowed more people to gain health care coverage and access to doctors and care, but high deductibles, and surprise medical bills as well as prescription drug costs, have contributed to the rising debt, said Anthony Wright, executive director of Health Access California, the statewide health care consumer advocacy coalition.
California was one of the first states to set up a health care exchange and implement a Medicaid expansion under the Affordable Care Act. Since then, the state saw its number of uninsured residents drop from 17.2 percent in 2013 to 7.2 percent currently, according to state officials.
But at least 30 percent of those who have purchased health coverage through Covered California, the state's health insurance marketplace, have chosen plans with low premiums and high deductibles. An individual who earns $30,000 a year, for example, who chooses a bronze, plan will qualify for federal tax subsidies to pay a $150 monthly premium. But that person has to meet a $6,300 deductible before their insurance covers the rest. One night at a hospital or an emergency room visit can easily surpass that cost.
"Outside of housing costs and a mortgage, a health care bill is the biggest bill you will get in your entire life," Wright said. " It's often unplanned and unexpected. If you're living paycheck to paycheck, you've sort of figured out how to live your life. But then that medical bill may be the straw that breaks the camel's back."
Some relief is coming, Wright said, including expanded state subsidies to cover the cost of care for more people. Starting Jan. 1, more middle-income people who buy health coverage through Covered California, the state’s insurance exchange, will qualify for financial aid.
The state also will expand Medi-Cal, California’s Medicaid program, to young adults age 19 to 25, regardless of immigration status. The goal is to bolster coverage among young people and the undocumented who are still among the most likely to be uninsured.
In the meantime, Antico said RIP is looking into various partnerships to boost donations. While such benevolent programs cannot solve the medical debt crisis, his goal is to help by focusing on medical debt carried by veterans, single women, teachers, and doctors who work in rural areas.