New York City Mayor Eric Adams announced on Monday a plan to buy up millions of dollars in medical debt owed by hundreds of thousands of New Yorkers.
In what the mayor said would be a "one-time" deal, the city will spend $18 million in taxpayer funds over the next three years to pay off medical debt owed by up to 500,000 residents. Officials estimate that the program will wipe out over $2 billion of medical debt owed in what they call the "largest municipal initiative of its kind in the country."
"Getting health care shouldn't be a burden that weighs on New Yorkers and their families," Adams said in a statement. "Since day one, our administration has been driven by the clear mission of supporting working-class New Yorkers and today's investment that will provide $2 billion in medical debt relief is another major step in delivering on that vision. Up to half a million New Yorkers will see their medical debt wiped thanks to this life changing program — the largest municipal initiative of its kind in the country."
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Medical debt is among the top causes of bankruptcy in the United States, especially for those who lack health insurance. Nearly 1 in 10 U.S. adults (9%), or roughly 23 million people, owe medical debt, according to the Kaiser Family Foundation. The collective medical debt owed by Americans nationwide is estimated by the group to be as much as $195 billion.
New York City will partner with RIP Medical Debt, a New York-based nonprofit, to acquire debt portfolios and retiree debt from health care providers and hospitals and erase it, officials said.
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"No one chooses to go into medical debt — if you're sick or injured, you need to seek care. But no New Yorker should have to choose between paying rent or for other essentials and paying off their medical debt, which is why we are proud to bring this relief to families across the five boroughs, as we continue to fight on behalf of working-class New Yorkers," Adams said.
Founded in 2014, RIP Medical Debt uses donations to buy debt from health care providers in bundles at a steep discount. The group uses data analytics to identify debtors who are most in need — households that earn less than four times the federal poverty level or whose debts are 5% or more of annual income — and buys their debt. Those who benefit from the organization's work receive letters in the mail announcing that their debt has been erased, tax and penalty-free.
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The group has partnered with local governments before, including with Cook County in Illinois to abolish more than $280 million in medical debt owed by residents, but never at the scale of its partnership with New York City.
"It's gratifying to see this collaboration come together since RIP Medical Debt was founded here in New York City," said Allison Sesso, president and CEO, RIP Medical Debt. "Medical debt is a failing of the system writ large, not people. Beyond creating often unpayable financial burdens, medical debt undermines one's mental health as well. By making future care more accessible, this initiative aligns well with hospitals and health systems' community benefit and health equity efforts."
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To supplement the city's spending on the program, RIP Medical Debt and the Mayor's Fund to Advance New York City are soliciting private donations to raise additional funding over the next three years.
