New York City Mayor Eric Adams has announced plans to purchase millions in residents’ unpaid medical debt and then erase it in a scheme that could benefit up to 500,000 people who call the city home.
According to the Jan. 22 press release from the mayor’s office, New York will partner with RIP Medical Debt, a nonprofit organization that buys portfolios of outstanding medical debt from healthcare providers the secondary debt market where providers look to reclaim some of their costs at a steep discount with the help of private donations, or in this case public funding.
It added that while the non-profit can’t pick the individuals for whom to relieve debt, its program prioritizes the debts its assessors believe will have the most impact for those in need and least able to pay. There is no application process for the program.
Nearly 500,000 New Yorkers selected by the program for debt forgiveness will be notified in the coming months if their medical bills are among those selected to be forgiven, with no strings attached or tax penalties.
In comments about the importance of the program, Mayor Adams said that medical debt is the number one cause of bankruptcy in the United States and disproportionately affects the uninsured, under-insured, and low-income households.
“Getting health care shouldn’t be a burden that weighs on New Yorkers and their families,” he said.
“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,” the mayor added.
New Yorkers must have unpaid medical bills that make up at least 5 percent of their annual household income to be eligible. Any household with a yearly income under four times the federal poverty line, which is roughly $31,200 for a family of four, is also eligible to have their debts waived.
Founded in 2014, RIP Medical Debt says on its website over $10.4 billion in medical debt has been erased for more than 7 million people around the country, thanks to the group’s efforts. Currently, it’s estimated that 100 million Americans hold some medical debt, with the total amount nationwide exceeding $195 billion. Even people with insurance are at risk of carrying medical debt.
Shams DaBaron, a homeless and housing advocate, applauded the scheme as a step in the right direction in addressing one of “the root causes of poverty.”
“In a world where homelessness can touch anyone, from those born into poverty to those with privilege, we face the stark reality that a medical emergency can threaten someone’s financial stability,” she said.
City Already Facing Severe Financial Stress
New York City has been under severe financial stress recently, partly due to the influx of thousands of unvetted immigrants. Since the spring of 2022, more than 130,000 people have come through the city’s already crowded shelter system after illegally entering the United States. Some 70,000 still rely on city-run shelters for their basic needs.
Despite the ongoing financial strain on city resources, Mayor Adams says the $18 million required to forgive the medical debt of underprivileged New Yorkers is still money well spent, because it will lessen the strain on city resources in the long run, at least in theory.
“If you are able to save $2 billion in debt, that $2 billion trickles down to those households, who are not going to fall into our safety net,” he said. “They’re not going to fall into our homeless system.”
