Barberton and Akron working to erase medical debt for some residents. Will Summit County?

Barberton is joining Akron in hiring a nonprofit organization to erase medical debt held by private citizens. But it does not appear that Summit County will be joining the effort for other county residents.

In July, Akron City Council unanimously approved authorizing Mayor Dan Horrigan and his staff to enter a contract with RIP Medical Debt. The organization has worked with dozens of cities, counties and other organizations across the United States to pay off private medical bills.

RIP takes donations and buys large bundles of medical debt at a steep discount — $1 usually can leverage $100 in debt relief. The debt erasure is a gift with no tax consequences to recipients.

The organization has relieved more than $10 million in debt so far and helped nearly 6.7 million individuals and families in all 50 states and Washington, D.C., according to its website. 

Horrigan committed $500,000 in American Rescue Plan Act (ARPA) federal stimulus funds to the effort. That will give RIP Medical Debt enough money to leverage the retirement of up to $50 million in medical debt held by Akron residents and their families.

Who qualifies for medical debt relief?

RIP negotiates and purchases medical debt in bulk from a hospital, which can include current and past-due bills sold to a debt collector.

RIP assists patients with a household income up to 400% of the federal poverty level. That is $54,360 for an individual or $111,000 for a family of four. Additionally, the debt must equal 5% or more of annual income.

Patients can’t apply to be considered for debt relief.

According to the Kaiser Family Foundation, four in 10 adults in the United States say they have some kind of medical debt. Two-thirds of bankruptcies cite medical debt as a leading cause. 

What’s happening in Barberton?

Barberton Mayor William Judge said he and others had seen news reports this year that other large Ohio cities were looking into or had committed to relieving medical debt for some residents.

Judge reached out to RIP and received some initial estimates for Barberton residents. He was told that 4,000 Barberton residents could qualify and if Barberton put in $110,000, that would write off about $10 million in medical debt.

“I was a little skeptical,” Judge said recently during a phone interview.

Judge reached out to officials in Cook County in Illinois and other communities that were further along in the process as he researched it.

In April, the Barberton City Council unanimously approved using $110,000 in American Rescue Plan Act funds to work with RIP to eliminate medical debt for qualified Barberton residents.

Judge said he applied to the Barberton Community Foundation for the organization to kick in $10,000. The request was approved, so the city will spend $100,000 in ARPA funds, he said.

Judge said he is reviewing the RIP contract and anticipates signing it within the next few weeks.

Once Judge signs the contract, RIP has told him it could take six to 10 months for residents to see relief.

Judge said he and the council believed relieving medical debt for some residents is the right thing to do.

“Part of my job is to just improve the quality of life for our residents and looking at medical debt and how people can be buried with it,” Judge said. “If we can pay off medical debt and the ratio is that high, why wouldn’t we do everything in our power to help 4,000 residents?”

Judge said there remains a lot of confusion about how the medical relief would work and education is needed.

The city will not be issuing checks to relieve the debt and the city won’t know which residents’ medical debts are erased, Judge said.

What’s happening in Akron?

When the Akron City Council approved the legislation in July to work with RIP Medical, it was the culmination of a year’s worth of work by Councilwoman Nancy Holland.

Holland was made aware of the medical debt relief program by a group of students at Northeast Ohio Medical University (NEOMED).

Holland, joined by council leadership and Deputy Mayor Marco Sommerville, then launched a public campaign in March to convince Horrigan of the merits of the plan. Council passed a resolution days later urging Horrigan to find unspent ARPA federal dollars to seed the program.

City spokeswoman Stephanie Marsh said the law department is reviewing the contract with RIP Medical Debt.

What's RIP? Some Ohio cities are erasing their residents' medical debt. Here's how it works

Summit County not pursuing contract with RIP Medical Debt

Summit County government does not appear to be pursuing a deal with RIP to widen the medical debt relief to other qualified residents in the county.

In November 2022, Toledo became the first Ohio city to partner with RIP with an $800,000 investment in ARPA funds. Lucas County made an equal match in general funds, which combined could retire $240 million in medical debt for city and county residents.

In a phone interview, Greta Johnson, chief of staff for Summit County Executive Ilene Shapiro, said the NEOMED medical students came to County Council in the spring to explain RIP Medical Debt. Johnson said there was no formal presentation.

Mark Potter, chief of staff for Summit County Council, confirmed there has been no indication from council members to move forward.

Johnson said Summit County officials researched the program and discovered there were questions raised by outside counsel for Lucas County about whether ARPA funds could be used for the medical debt relief program.

RIP Medical Debt spokesman Daniel Lempert said other communities have used ARPA funds and the White House acknowledged RIP’s program as an appropriate use for ARPA funds.

Regardless, Johnson said Summit County’s ARPA funds are spoken for and there is no money in the general fund to pursue medical debt relief.

Johnson also expressed concern that consumers’ credit scores were already ruined with medical debt and whether the debt relief would help.

“If a medical debt acquired by RIP had been reported to the credit agencies, we ensure that the negative mark is removed," Lempert said.

“It's up to the respective provider/hospital/collection agency if they want to report a medical debt or not — so sometimes debts we acquire haven’t been reported so there’s no need,” he said. “There is a new federal law barring debts below $500 from being reported to the credit agencies which also provides more times for people to pay medical debts before they’re reported.”

Cure for medical debt? Akron to work with nonprofit to erase millions in hospital bills

What’s next?

Lempert said no other Akron-area governments have approached his organization about partnering to erase residents’ medical debt.

RIP representatives are “already in talks with some local hospitals ... and hope to have more to share soon,” he said. Lempert said he could not discuss specifics because nondisclosure agreements are signed.

“I can’t say exactly when a first round of debt relief will be announced. We need to do our due diligence and sign a contract with Akron and then sign agreements with local hospitals. Then we’ll be ready to start announcing debt abolishments,” he said.

Beacon Journal medical reporter and consumer columnist Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com

This article originally appeared on Akron Beacon Journal: Barberton joins Akron in working to erase some residents’ medical debt