Spotlight Exclusives

RIP Medical Debt Reduces Crushing Health-Related Bills for Millions

Allison Sesso Allison Sesso, posted on
Founded in 2014 by two former debt collections executives, RIP Medical Debt has pioneered a new way to relieve the medical debt that hangs over the lives of too many Americans.  The organization uses donations to buy large bundles of debt that is erased with no tax consequences to donors or recipients—and RIP Medical Debt has relieved over $7 billion in debt so far. Allison Sesso, the group’s president and chief executive officer, spoke to Spotlight recently about its approach, its growing partnership with U.S. churches and hospitals, and the renewed interest in reducing medical debt in the White House and on Capitol Hill. The transcript of the conversation has been lightly edited for length and clarity.

Why don’t you give our readers a quick overview of what you’re doing and how you got started?

We are a nonprofit charitable organization that’s nationally focused on one issue and that is the relief of medical debt for individuals. Our mission is to end medical debt, and we do that by mimicking for-profit debt buyers, like a collection agency. We take advantage of the fact that the market has priced medical debt extremely low because people can’t pay their medical bills—their means don’t align with the expectations of what they have to pay out of pocket. And so, we’re able to take $1 and relieve on average $100 of medical debt. People donate to us, and we bundle those donations, and then we buy medical debt for a fraction of its face value directly from hospitals or from secondary market providers that have already bought the debt themselves.

Once we get our hands on that debt, we relieve people of it and send them letters and let them know that they are free and clear of that debt for the rest of their lives and we remove corresponding negative marks from their credit scores. We will never collect on it. At the same time, when we do this work, we also recognize that we shouldn’t exist as an institution and that this problem is systemic in nature. And so, we do everything we can to participate in the larger conversation about what this problem is, what caused it, and the fact that we need more solutions. We are just picking up the pieces of a very broken system.

Is there statistic that you use to illustrate how pervasive this problem is?

More than 100 million people, or 41% of adults in the United States, have medical debt, and that’s combining medical bills and dental bills, so it’s pretty pervasive. And the estimates are there is something like $195 billion in medical debt in the United States.

And has that gotten worse during the pandemic?

You know, actually I wouldn’t say it has gotten worse because what happened was a lot of people stopped getting medical care. And government did a lot of things to support families, such as increases in the Earned Income Tax Credit and Child Tax Credit. There was a lot more support for families and a lot more support for hospitals. There was the CARES Act. There was more money flowing towards both the economy and healthcare in a way that kept the problem from exacerbating, as you would expect. But we also know delaying care often leads to more expensive healthcare interventions, so the effects of the pandemic are still coming into focus.

What’s the reaction when people get these letters, I assume out of the blue, and they suddenly have no more medical debt?

Their reactions are just massive relief, even when the amount of debt that we are relieving is not high. It is usually not every debt they owe, particularly if they went to multiple providers. But people’s feeling of hope, of relief, of appreciation, are deep. It really gives you a sense of the human reality, that people are struggling and that they are overwhelmed and that they are trying their best. They often just feel like failures because of medical debt, despite the fact that it’s clearly a pervasive problem and very much systemic and really not a personal failing. Americans really have a sense of pride in taking care of themselves and we are setting them up for failure when it comes to medical debt.

Who is eligible?

We have two eligibility criteria and one of them actually just changed. We used to use 200% of poverty and below but we just increased it to 400% of the federal poverty line, recognizing the impact of inflation on individuals today. The other one is the debt size relative to the income. If the debt itself is 5% or more of your overall income, we will relieve your debt at any income level.

 Tell us a bit about this campaign with churches, the Nation That Cares Program

Churches have really been a big part of who we are as an institution. We were started in 2014 by two former debt buyers, who really understood how to leverage the debt buying industry to reduce medical debt. We work with all kinds of partners, and churches have really come to the table in the last several years and are responsible for $1 billion of the $7 billion of debt that we’ve abolished with the funds that they’ve raised. What was happening initially is that the churches were doing it kind of piecemeal—you’d have a church in Kentucky and then another church in New York, and they were doing it in their own communities. That was fine, but we said, churches can come together and make a bigger impact. If we’re combining all those local campaigns towards one big goal, it’ll make a bigger statement about the problem.

So, churches have come together in a campaign that we call A Nation That Cares, understanding that your neighbor is not necessarily just who lives across the street from you, but the whole country is your neighbor and partner. They’ve set up a big goal of raising $5 million in order to get rid of $500 million of medical debt.

And how does that work? If I’m a church in Kentucky, what do I need to do to participate?

There’s a link on our website that’s dedicated to this particular campaign. Depending on the church, they’ve taken different approaches. Some of them send it out in their church bulletin. Some of them have pastors or reverends that are speaking about this issue from the pulpit. Some of them are doing multiple months of campaigns, sometimes leading up to certain holidays, like Easter or Christmas. It all depends on where they are and what they can do. There are biblical ties to this issue, and not just in Christianity with the concept of Jubilee, but the Jewish religion with Shmita and other faiths as well.

If your church wants to join us, call us and we can talk you through some of the approaches other churches have taken and tell your more about the opportunities.

You alluded earlier to some of the things that were done legislatively and by executive order during the pandemic. The White House has come out with a plan to abolish some student debt; is there anything being discussed for medical debt?

We were invited to the White House in April and got to meet with the vice president and some other folks who are focused on the issue of medical debt. So, there’s a lot of attention being paid to medical debt in a way that I haven’t seen at the national level before, which is good. But it also means that we have a real problem on our hands. They’re doing things like looking at how it impacts people’s credit reports and there’s been some adjustments made by the credit agencies.

There’s been the recent legislation that was passed that offers additional support for insurance coverage, which is really important. There is attention being paid to the issue. It is not on the scale of student debt, but it’s certainly being talked about. And we would like to see more of that.

I’m guessing the surprise medical billing legislation that got passed also had some impact?

I think it’s good and that transparency can be helpful. But fundamentally, the prices in healthcare don’t really make a whole lot of sense to the average person. So, I think it’s still putting the onus on the individual to act like a consumer, and you can’t really act like a consumer when it comes to medical care because of the way that the prices have been negotiated with insurance companies.

Is there anything coming up for the organization in terms of new initiatives?

We’ve been doing a lot more work with hospitals, so that’s something we’re really excited about. We just had this great piece in NPR that I think gave us some good attention and folks like you are getting the word out about us. Our intention is to do a lot of fundraising at the end of the year so that we can actually make sure that we close all of these deals with these hospitals and get our hands on as much debt as possible.

I also wanted to ask about the impact of the gift you received from Mackenzie Scott

Oh, it was very significant. Not only could we buy a lot of debt with it, which we are doing, but we importantly could invest in our systems and make ourselves more efficient for the long term. We put a lot of money into what we call our “debt engine”, which is the system that takes in the files from the hospitals and helps us analyze them to make sure that we can qualify individuals. It’s also allowed us to invest in some marketing work so that people are aware of us—not only hospitals and donors, but importantly, the beneficiaries who receive those letters, so that they really believe it.

We’ve also invested in hiring a staff member to serve as our anthropologist because we’re really trying to tell the story of the individual who has been impacted by medical debt and what it has meant for them to have their debt relieved. We think that that’s a critical component of the medical debt reality in the United States, that we let the voices of those impacted be heard.

How are you going to be doing that?

We already are doing it. We talk to individuals and collects their stories. We’ve just invested in a database that helps us tracks themes of individuals—economic themes, distrust of the system, themes of feeling mentally exhausted as a result of medical debt. The other story we want to unpack is the racial dynamics at play in healthcare. We know that medical debt impacts people of color more pervasively and we really want to be able to tell that story as well.

Is there anything else you’d like to add?

One other thing I would mention is the policy solutions that we’re looking at. Before somebody walks into the hospital, we want to make sure that they have good and comprehensive coverage. And then number two, once you get to a hospital, we want to ensure that the hospital has good financial assistance policies and plans, and that they’re accessible and understandable to people. And then the third priority is once somebody has debt, ensuring that we’re really careful about what we call ECA, which is extreme collection actions. Things like garnishing people’s wages and putting liens on homes should really, really be limited, if they happen at all for medical debt.



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