PC: The New York Times
In 2018, two women in Ithaca, New York, set out to help people struggling with unpaid medical bills, although neither had the means to pay off large debts individually. As reported by The New York Times, Judith Jones, a retired chemist, and Carolyn Kenyon, a psychoanalyst, organised a local fundraising campaign and collected $12,500 over several months. The contribution enabled the organisation to acquire a portfolio worth $1.5 million in medical debt, benefiting 1,284 New Yorkers who had no prior connection to the two women. Their fundraising effort began in the spring of 2018. By the end of the summer, they had raised $12,500 and passed the money to the charity, which used it to purchase a portfolio of outstanding accounts. Medical Debt used this system to purchase the $1.5 million portfolio for roughly half a cent for every dollar owed. The result reached households across New York State in November 2018. About 1,300 yellow envelopes were sent to residents whose medical debts had been acquired and cancelled through the campaign. The 1,284 recipients lived in 40 of New York’s 62 counties, with the affected accounts linked to around 130 hospitals and their branches, according to the New York Times. By the time Jones and Kenyon’s campaign was reported in December 2018, R.I.P. Medical Debt said its work had forgiven $434 million in medical debt and assisted approximately 250,000 people. The charity estimated that Americans held more than $750 billion in past-due medical debt. Jones and Kenyon had raised $12,500; the charity had turned that contribution into the cancellation of $1.5 million in medical debt. For 1,284 people across New York, the outcome was a letter confirming that money they had owed for medical care was no longer due.
The cancelled debts were treated as gifts and removed from recipients’ credit reports, according to the charity. They sent the money to a nonprofit that buys overdue medical bills for a fraction of their face value before cancelling them. For those recipients, the relief arrived in the form of an unexpected letter. Jones and Kenyon became involved in the initiative after learning about R.I.P. Medical Debt, a New York-based nonprofit established to help people burdened by medical bills. Both women belonged to the Finger Lakes chapter of the Campaign for New York Health, an organisation advocating universal health coverage through the proposed New York Health Act. Rather than attempt to cover individual patients’ bills themselves, they collected donations from people willing to contribute towards buying existing medical debt. Medical debts that have remained unpaid for long periods can be sold to collection agencies and other buyers at steep discounts. Reportedly, R.I.P. The people whose bills were included did not have to apply to Jones and Kenyon for assistance. The charity selected eligible accounts and arranged for the balances to be forgiven. The debts covered people who had received medical care but had not been able to settle their bills. They had not necessarily known their accounts were being considered for relief, and the forgiveness was provided without requiring them to repay the donors. Other fundraising campaigns followed, including efforts involving NBC and Telemundo affiliates. Those figures were substantial, but they represented only a small portion of the problem the organisation was addressing. The scale of the wider problem was part of the reason Jones and Kenyon approached their campaign as a limited intervention. Their fundraising could not change the price of hospital care or resolve the financial pressures that had left people with unpaid bills. It could, however, remove some existing obligations. For Antico, the value of the programme lay partly in the fact that recipients did not need to seek help publicly. The yellow envelopes sent out in November were the final stage of the Ithaca campaign. You use AI every day. Now get your AI Quotient. Take the AIQ test.
The charity could identify eligible accounts, purchase them and arrange for the debt to be cancelled before the affected individuals knew what had happened.
Medical Debt was founded in 2014 by Craig Antico and Jerry Ashton, both of whom had previously worked in the debt collection industry. The charity had attracted national attention two years earlier, when British comedian John Oliver featured medical debt in an episode of his HBO programme Last Week Tonight in 2016. As part of the segment, Oliver paid $60,000 to purchase and forgive $14.9 million in medical debt through the organisation.
Because overdue accounts can be sold for a small proportion of their original value, relatively modest donations can cover balances worth much more on paper. Around 9,000 people received letters informing them that their debts had been cancelled as a result of that effort. The broadcast introduced a wider audience to the mechanics of buying debt portfolios and showed how donations could be used to clear balances far beyond the amount contributed.
R.I.P. Their experience had brought them into contact with people who struggled to pay old bills, including debts arising from medical treatment. The organisation adopted a different approach to the accounts it acquired. Instead of pursuing borrowers for payment, it raised money to purchase qualifying debts and cancel them. The charity focused its work on people facing financial hardship. Its stated criteria included individuals earning less than twice the federal poverty level, those experiencing serious economic difficulties and people facing insolvency.