Undue Medical Debt is retiring $30 billion in unpaid medical payments for 20 million folks.
DNY59/Getty Pictures/E+
cover caption
toggle caption
DNY59/Getty Pictures/E+
Underscoring the large scale of America’s medical debt downside, a nonprofit has struck a deal to repay previous medical payments for an estimated 20 million folks.
New York-based Undue Medical Debt, which buys affected person debt, is paying off $30 billion value of unpaid payments in a single transaction with Pendrick Capital Companions, a Virginia-based debt buying and selling firm. The common affected person debt being retired is $1,100, in accordance with Undue Medical Debt, with some reaching the lots of of 1000’s of {dollars}.
The deal will stop the debt being bought and defend thousands and thousands of individuals nationwide from being focused by collectors, although this may overwhelmingly profit residents of Texas and Florida, who account for about half of the money owed being retired.
Regardless of the dimensions of this deal, nevertheless, even proponents of retiring affected person debt acknowledge that such purchases can not remedy a disaster that now touches round 100 million folks within the U.S.
“We do not suppose that the best way we finance well being care is sustainable,” Undue Medical Debt chief government Allison Sesso stated. “Medical debt has unreasonable expectations…the individuals who owe the money owed cannot pay.”
Prior to now 12 months alone, Individuals borrowed an estimated $74 billion to pay for well being care, a West Well being-Gallup survey discovered. And even those that profit from Undue’s debt aid might produce other medical debt that will not be relieved.
This massive buy additionally highlights the challenges that debt collectors, hospitals, and different well being care suppliers face as sufferers rack up large payments that are not lined by their medical insurance.
Pendrick’s chief government, Chris Eastman, declined a number of requests to be interviewed in regards to the debt sale, which has not been beforehand reported. However Eastman acknowledged in a 2024 podcast episode that gathering medical money owed has grown tougher as regulators have restricted how collectors can pursue sufferers.
Pendrick has now shuttered, which Sesso stated supplied sturdy motivation for this deal.
“This was a very nice alternative to get a debt purchaser out of the market,” she stated.
Undue Medical Debt pioneered its debt aid technique a decade in the past, utilizing charitable donations to purchase medical debt from debt buying and selling corporations at steeply discounted costs after which liberating sufferers from the duty to pay.
The nonprofit now buys money owed straight from hospitals, as nicely. And it’s working with about two dozen state and native governments to leverage public cash to alleviate medical debt in communities from Los Angeles County to Cleveland to the state of Connecticut.
The strategy has been controversial, and Undue Medical Debt’s record-setting buy — financed by a mixture of philanthropy and taxpayer {dollars} — is prone to stoke extra debate over the worth of paying collectors for medical money owed.
“The strategy is simply treating the signs and never the illness,” stated Elisabeth Benjamin, a vp on the Neighborhood Service Society of New York, a nonprofit that has led efforts to limit aggressive hospital collections. Benjamin and different advocates say systemic adjustments similar to guaranteeing hospitals provide adequate monetary support to sufferers and reining in excessive medical costs could be extra beneficial in stopping folks from sinking into debt.
However many authorities officers see retiring folks’s unpaid medical payments as helpful if it is half of a bigger technique for localities, states and even hospitals and well being methods to assist sufferers keep away from debt within the first place.
“Turning off the faucet is what’s actually vital in the long term,” stated Naman Shah, a doctor who directs medical affairs on the Los Angeles County Division of Public Well being. To do this, the county is working to enhance native hospital monetary support applications for sufferers, so folks do not find yourself in debt within the first place. However Shah stated debt aid is essential, as nicely.
”It is easy to criticize band-aids whenever you’re not the one who’s lower,” he stated. “As a doctor, I maintain individuals who have cuts, and I do know the significance of sewing them again up.”
Undue Medical Debt’s newest deal, which it’s spending $36 million to shut, will assist sufferers nationwide, in accordance with the nonprofit. However about half the estimated 20 million folks whose money owed Pendrick owned dwell in simply two states: Texas or Florida.
Neither has expanded Medicaid protection by way of the 2010 Reasonably priced Care Act, a key device that researchers have discovered bolsters sufferers’ monetary safety by defending them from large medical payments and debt.
The sufferers eligible for debt aid have incomes at or beneath 4 occasions the federal poverty degree, about $63,000 for a single particular person, or money owed that exceed 5% of their incomes.
About half the money owed are additionally greater than seven years previous. These have been donated to Undue Medical Debt by Pendrick, the group reported.
The nonprofit plans to pay for the remainder of the money owed over the subsequent 12 months and a half, although all collections have stopped towards sufferers. It additionally plans to spend an extra $40 million — or $2 an individual — to course of the money owed, discover sufferers, and inform them that their money owed have been relieved.
Sesso, Undue’s chief government, stated she hopes the debt buy will preserve policymakers targeted on enacting longer-term options to the nation’s medical debt disaster.
She applauded state leaders for taking steps to bar medical money owed from their residents’ credit score scores. However she stated motion can also be wanted in Washington, D.C. Nevertheless, the Trump administration has suspended rules enacted below former President Joe Biden that might have barred credit score reporting of medical debt nationally, and congressional Republicans are actually transferring to revoke the brand new guidelines.
“There’s a restrict to what state and native governments can do to unravel this downside,” Sesso stated. “It is actually a nationwide downside that must be solved on the nationwide degree.”
KFF Well being Information is a nationwide newsroom that produces in-depth journalism about well being points and is likely one of the core working applications at KFF — the impartial supply for well being coverage analysis, polling, and journalism.
