500,000 New Yorkers could have their medical debt forgiven under the new program
New York City will buy and erase millions of dollars in medical debt in a program that officials hope will eventually help as many as 500,000 New Yorkers.
Mayor Eric Adams announced Monday that the city would invest $18 million in a partnership with a nonprofit that buys unpaid hospital medical debt at deep discounts and then erases it. Hospital systems and commercial debt buyers are often willing to sell medical debt at deep discounts, and the $18 million could wipe out more than $2 billion in unpaid medical bills, city officials said.
“Up to half a million New Yorkers will see their medical debt erased thanks to this life-changing program – the largest municipal initiative of its kind in the country,” said Mayor Adams.
Daniel Lempert, a spokesman for the nonprofit RIP Medical Debt, said the group had begun conversations with New York City hospitals about examining their books to identify patients eligible for debt relief. When deciding which debts to buy, the group looks for patients whose unpaid medical bills are at least 5 percent of their annual household income, or for patients in households with incomes below four times the federal poverty level — those is $31,200 for a family of four.
New Yorkers do not need to apply to be included in the program. RIP Medical Debt said those who chose to have their debts erased would receive a letter in the post.
“No one in New York City, or in America, in 2024 should have to choose between getting the health care they need and paying the rent or buying food to feed their families,” the city's health commissioner said , dr. Ashwin Vasan. .
About four in ten adults According to a 2022 study, people in the United States have some form of medical debt.
In New York, nonprofit hospitals often sue patients for unpaid medical bills. Over a five-year period, hospitals across the state more than 40,000 such lawsuits filed against patients, according to the Community Service Society, a Manhattan nonprofit.
The state's largest hospital system, Northwell Health, continued to sue patients for unpaid bills during the first year of the pandemic, sometimes for debts of less than $1,000. After The New York Times reported on the practice, the hospital said it would drop all legal claims it filed in 2020.
Just last month, Governor Kathy Hochul signed legislation that prevents healthcare providers and ambulances from reporting a person's medical debt to credit institutions.
RIP Medical Debt was founded about ten years ago by two men with long experience in the debt collection industry. The idea came from the Occupy Wall Street movement to the organization's website. The group says it has been cleared so far more than $10.4 billion in medical debt owed by more than 7 million people.
The organization has worked with local governments in the past. For example, a program with Cook County, Illinois, has wiped out more than $280 million in debt for more than 158,000 residents.