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Is medical debt forgiveness good public policy?

Originally posted here by Scioto Analysis on July 24, 2023. By Rob Moore.

Starting Scioto Analysis was the first time in my life I was living without health insurance. One of the things I felt like I could trim at the time was visits to the dentist: it felt like a luxury to get regular checkups and I brush and floss regularly, so I felt like I could get away with it.

Boy was I wrong. When I went to the dentist last year for the first time in four years, I had gum problems that develop when you don’t go in for regular cleanings. The dentist put me on a new mouthwash regimen and had me coming in for regular cleanings. I ended up racking up over $1,000 in dental bills for the year of treatment.

Last week, I was in the office for my regular cleaning. My gums had shown considerable resilience and were almost where they needed to be, but I still had some problem areas. The dentist recommended a targeted antibiotic regimen. This would cost another $600.

This is a lot to fall onto someone’s plate, but I’m not alone in the amount of out of pocket medical expenses I incur. And I have the means to pay for them. This isn’t the case for everyone.

A 2020 survey suggested Americans’ collective medical debt was nearly $200 billion in 2019. Nearly 5% of Americans owe over $2,000 in medical expenses. 1% of Americans are in deep medical debt, owing over $10,000 in medical expenses.

These expenses can have a significant impact on family incomes. A Census Bureau analysis found medical out of pocket expenses pushed 5 million people into poverty in 2020. Families that are cash constrained often pass on paying off medical debt in order to pay for other essentials such as food and housing.

Some solutions have emerged to reduce medical debt for struggling people. RIP Medical Debt is a nonprofit that partners with communities to assess where medical debt is least likely to be paid, purchase it from collectors for pennies on the dollar, then forgive it.

The Columbus, Ohio City Council is currently considering a proposal to partner with RIP Medical Debt to cancel millions of dollars of debt for Columbus residents. Debt cancellation would be targeted to low- and middle-income families with debt owed to Columbus’s four main hospital systems.

Debt cancellation can have impacts on health utilization. A 2021 study of a debt forgiveness program for low-income patients at Kaiser Permanente hospitals in Northern California found debt forgiveness led to a sharp increase in visits to the doctor among those who received debt forgiveness. This led to higher detection of serious medical conditions like heart disease and diabetes and a large uptick in prescription refills for treatment of high cholesterol, diabetes and depression.

Medical debt cancellation isn’t a silver bullet for solving poverty, but it is one tool in our arsenal for helping a subset of the population who have become victims of the United States’s notoriously inefficient health care system. Franklin County Ohio’s Rise Together Innovation Institute is leading discussions on medical debt cancellation because of its promise to alleviate the burden of medical debt in the region. We’re looking forward to seeing what progress they can make on this front to help alleviate the burden for people who are struggling.


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