University Researchers Launch Economic Impact Study of Medical Debt Forgiveness
As Congress works on new health care law that may increase Americans’ medical bills, researchers begin studying the economic impact of forgiving medical debt.
NEW YORK, June 22, 2017 — University researchers and others planning the nation’s first economic impact study of medical debt forgiveness met today in New York for an historic “mini-summit,” coincidentally held the same day as GOP senators in Washington unveiled a new health care bill.
“The pending changes in national health care policy may vastly increase medical debt in America,” said Jerry Ashton, cofounder and Executive VP of RIP Medical Debt, a New York-based charity that locates, buys and forgives unpayable medical bills. “This economic impact study of medical debt forgiveness is urgent and important for how healthcare is approached in the future.”
“About 64 million Americans struggle with unpaid and unpayable medical debt annually, including those with health insurance,” said Craig Antico, RIP cofounder. “About 15 million people annually become insolvent from medical bills, using all of their savings and going into more debt for their health care. They often go without care because of the cost.”
RIP organized the gathering with researchers from the economics and public policy departments of UCLA, University of Chicago, MIT, and UC/Berkeley. They met with representatives from TransUnion, the Consumer Finance Protection Bureau (CFPB), 1/0 Capital, and others.
“We are measuring baseline outcomes and tasks in a pilot study before we scale up the research project,” said Francis Wong, a PhD candidate at the University of California Berkeley. “This pilot study will test the debt-forgiveness pipeline and make sure it all works.”
The pilot and scaled-up study will measure the economic impact of medical debt forgiveness by tracking such factors as health status, health care utilization and credit score, said Wong. “The study will measure the impact on the order of years, but we expect preliminary findings in about six months.”
Using funds for the pilot study from private donors, RIP’s purchase an initial $130,000 worth of unpaid medical debt in the debt-buying marketplace, and then RIP forgave it rather than collect it. Study partner TransUnion is removing records of the debt from the beneficiaries’ credit reports.
The debt to buy was identified by TheNumber, a financial data service of 1/0 Capital, which lent its New York office for the meeting, attended by nearly 30 people from New York and across the country. TheNumber also will locate and identify medical debt for the scaled-up study, which could range in the millions.
The morning session of the summit featured short reports by the researchers and study supporters, including callers in Colorado, California and Hawaii. The afternoon session featured working sessions with the “University Team” and breakout sessions for special interest groups in the banking, collections, insurance, philanthropy, medical care, and data technology.
“Nearly 40 percent American households with annual incomes below $50,000 report problems paying medical bills,” said Wes Yin, Associate Professor of Public Policy at UCLA. To understand its impact, the team will use “a randomized control methodology to study the impacts of medical debt abolishment.
According to Neale Mahoney, Assistant Professor of Economics at University of Chicago, “We are hoping to identify which types of household benefit the most from medical debt relief, so medical debt forgiveness can get the highest bang-for-the-buck.”
“Our research hopes to bring the issue of consumer medical debt into the spotlight by precisely measuring its consequences for debtors,” said Francis Wong from UC/Berkeley. “We hope our work will eventually inform policy to improve the way the healthcare system manages patient financial care.”
“By studying how the relief of the medical debt burden affect people’s finances, include their ability to pay off student and auto loans and credit card and mortgage debt”, said Ray Kluender, a PhD candidate at MIT, “we hope to better understand whether the forgiveness of debt (medical debt in particular) can help spring people out of debt traps and avoid bankruptcy.”
RIP Medical Debt has already attracted public attention for its unique charity work.
RIP was featured in June 2016 on HBO’s Last Week Tonight with John Oliver when the host used the charity to forgive almost $15 million in medical debt for about 9,000 American. Earlier in June 2017, RIP forgave $2.6 million in medical debt for the Minnesota Nurses Association and another $5 million in medical debt nationwide, identified by TheNumber, including $2 million in debt owed by veterans and active-duty military.
Craig Antico and Jerry Ashton are veterans of the collections industry upset by industry abuses. They founded RIP Medical Debt (ripmedicalnew.wpengine.com) in 2014 as a 501(c)(3) charity based in Rye, New York.