Imagine owing hundreds of dollars in medical debt and then having it suddenly erased. This scenario is becoming more common in the United States thanks to American Rescue Plan Act funds and a nonprofit called RIP Medical Debt.
Currently, nearly 1 in 10 adults owe more than $250 in medical bills and 6% of U.S. adults owe more than $1,000. Medical debt — debt from unpaid medical bills — often results from unexpected health care expenses, such as an emergency hospital stay following a health crisis or accident. While lack of health insurance is a key risk factor in having medical debt, nearly half of adults with insurance have incurred it too.
Medical debt can be devastating to one’s health and well-being. Negative effects of owing medical debt include cutting spending on food, clothing or other basic needs, being unable to access needed health care services, and being forced to change living situations. Medical debt is so commonplace in the U.S. that in 2022, credit bureaus removed paid medical collections from credit reports and in 2023, medical collections under $500 will no longer appear on consumer credit reports. These changes amount to an admission by credit agencies that owing medical debt is not a reflection of financial responsibility in the U.S. Instead, it is an all-too-common experience for users of our opaque health care system. It doesn’t need to be this way, though.
To combat medical debt, the nonprofit, RIP Medical Debt, has been using private donations to pay off medical debt since 2014. By purchasing debt for cents on the dollar, RIP Medical Debt uses the same model private sector companies have used to buy up debt — but arguably with better intent. More recently, RIP Medical Debt has started to use public dollars to cancel medical debt, contracting with more than 30 states, counties, and cities to cancel medical debt for hundreds of thousands of individuals using COVID-19 funds from the American Rescue Plan Act (ARPA).
Minnesota is not immune to the effects of medical debt. In February, state lawmakers proposed “The Minnesota Debt Fairness Act,” which would, among other things, ban medical debt from being reported to credit agencies, reduce interest on medical debt, and ban the withholding of medical services due to unpaid debt. Withholding medical services due to unpaid medical debt is on the minds of many Minnesotans after the New York Times reported that Allina Health was rejecting patients who were in medical debt from receiving care. This legislation is of critical importance but stops short of erasing medical debt for individual Minnesotans.
There have been efforts at the municipal level, though, to eliminate medical debt for Minnesotans. For example, in December of 2023, Mayor Melvin Carter of St. Paul announced the city would be investing $1 million of ARPA funds with RIP Medical Debt to pay off $100 million in medical debt for approximately 45,000 St. Paul residents. Other cities around the U.S. have taken similar action, including New York City, Washington, D.C., New Orleans, Chicago (Cook County), and Detroit (Wayne County).
We applaud the efforts by St. Paul and these other cities to cancel medical debt. So far, however, most efforts to address medical debt around the country have focused on large urban areas. While such efforts are urgent and important, they ignore the disproportionate impact of medical debt on rural residents. In the U.S., rural residents are more likely than urban residents to experience medical debt (11% vs. 8%). In addition to shouldering a disproportionate share of medical debt, rural residents are more likely to be uninsured, have worse overall health and mental health, and have more barriers to health care services, including recent closures of obstetric units in Minnesota. Ensuring the continued vitality of rural Minnesota requires addressing the crisis of medical debt there, which is made worse by these other systemic failures.
We heartily support the cancellation of medical debt, and we encourage lawmakers in Minnesota to add statewide medical debt cancellation to its legislative agenda. Other states such as Arizona and Connecticut have contracted with RIP Medical Debt to cancel debt throughout their states, and we encourage Governor Walz to do the same in Minnesota. Rural residents should receive the same benefit as their urban St. Paul counterparts.
Hannah MacDougall is an assistant professor at the University of Minnesota School of Social Work. Mariana Tuttle is a research fellow at the University of Minnesota Rural Health Research Center. Carrie Henning-Smith is an associate professor in the University of Minnesota School of Public Health Division of Health Policy and Management and deputy director of the University of Minnesota Rural Health Research Center.
The authors would like to acknowledge collaborators Katie Rydberg, MPH, Ingrid Jacobson, MPH, and Alexis Swendener, Ph.D., for their input.
