What if you had to choose between paying for groceries and paying for medical bills? What if 80 million Americans were in the same boat? What if there is
The stats are staggering. In March 2022, the Kaiser Family Foundation reported that four of her 10 adults are now in debt due to medical or dental bills. Half of those in debt owed her over $2,500 and 12% owed her over $10,000. Total U.S. medical debt exceeds her $195 billion.
The results are also real. Of the medically indebted adults, 48% of her reported using up all or most of her savings, and 40% reported taking another job or working overtime. 80% report skipping or delaying care or medications because of costs.
Here in Colorado, 733,000 Colorados have collected medical debt, according to the latest estimates from 2021. Assuming all are adults, she’s one in about six adults in the state. Median debt is $748. All of that amounts to hundreds of millions of dollars in medical debt shared by Colorados.
Both philanthropists and governments seem poised to tackle the problem. RIP Medical Debt is a leading non-profit organization that developed a model for medical debt forgiveness. They use their donations to buy the debt in bulk and send a letter to the debt owner informing them that the debt has been canceled and the impact on their credit score has been removed. They estimate that for every dollar he could buy $100 of debt.
Philanthropist MacKensie Scott recently donated $30 million to the work done by RIP Medical Debt. In November, the city of Toledo passed a bill that puts $800,000 in American Rescue Plan funds to relieve residents of up to $200 million in medical debt.
Should Colorado think the same way? What would state or local government efforts look like? There is a reason. Perhaps while the state is looking to turn the tide more broadly, debt forgiveness could provide immediate relief to nearly one in six adults in Colorado with medical debt. Well, it seems worth considering.
There is certainly a good question about secondary implications. If it’s a one-time thing, what happens to people who take out medical debt in the future? If it’s ongoing, will it discourage those who can afford it? Will it contribute to further systemic shortcomings? These are justifiable considerations in the formulation of policy and legislation.
The Biden administration had to weigh many of these same issues and ultimately decided it was worth balancing out and allowing $500 billion in student loans. There are two reasons why getting rid of medical debt is an easier decision than that decision.
First, one of the arguments against student loan forgiveness is that student loan takers are happy to do so. This is debatable given the income disparity between those with and without a college degree, but there are merits to the consideration.
But medical debt is fundamentally different. No one chooses to spend a month with a newborn in her NICU. No one chooses a rare genetic disease. The whole concept of health insurance is based on the idea that we are all subject to time and opportunity and that the best financial defense is to pool risks.
Second, the medical debt at issue is debt that has passed or may go to a debt collector. Essentially, health care providers decided it was better to get a few pennies for every dollar than keep chasing outstanding debt.
Debt collectors, on the other hand, think that if you can buy a bond for say $1.3 and collect it for $1.5, it’s worth your time. Naturally, it is also an incentive for any active collection method. However, thanks to this system, debt can be purchased from either health care providers or the secondary debt market, making it much cheaper than student loan forgiveness as it is well below its original value. increase.
And while America’s health care debt may feel modern in nature, debt forgiveness is also rooted in ancient traditions. The statement reminds us that:
“In the Hebrew Scriptures, the Jubilee was a time to free the slaves, return land to its rightful owners, forgive debts…The Jubilee called upon the poor for a fresh start, an opportunity to reestablish justice and equity. I did.”
Justice and fairness are fought and won, but this time they are also bargains.
Denver’s Emily Ileman served as Chief of Staff to the Colorado Office of Health Policy and Finance from 2019-2022 and previously worked in the Health Division of the White House Office of Management and Budget.
