Thousands of Cincinnatians will get a letter next month letting them know their medical debt has been erased — the first wave in a city-funded partnership that expects to forgive a total $134 million in debt for 34,000 residents.
"The potential of this investment is nothing short of extraordinary," said Mayor Aftab Pureval. "This is a powerful example of what can be accomplished when we work together and do what it takes to deliver on new, innovative policies that address our community's greatest hurdles."
Cincinnati City Council approved $1.5 million last year for medical debt relief as part of a Financial Freedom Blueprint with several other initiatives.
The city just finalized an agreement with Undue Medical Debt, a national nonprofit previously called RIP Medical Debt, to purchase and forgive debt with local health systems.
"I know sometimes it seems like magic, but it really is the result of a lot of collaboration and hard work," said Ruth Landé, VP of provider relations at Undue Medical Debt. "[We] buy large portfolios of unpaid medical bills that we get from providers at a fraction of the face value, and we buy all accounts which meet an income qualification."
Health care systems sometimes sell these debt portfolios to collections agencies for pennies on the dollar; the agencies then go after the patient for payment. Landé says health care systems usually prefer to sell to Undue instead, knowing the debt will be forgiven.
Eligible patients must be under 400% of the federal poverty level, or the debt must be more than 5% of their income.
The first phase in Cincinnati's program is a partnership with UC Health to purchase $6 million in debt for just $47,000, forgiving debt for about 4,000 people.
"In most cases, that uncollectible debt eventually gets written off and it's a total loss to the system," said Katrina English with UC Health. "So what we are able to receive, even though it's pennies on the dollars, from Undue Medical Debt, enables us to continue to provide additional care for those who are underserved in our in our community."
Undue Medical Debt is talking with other health care systems in the area for similar agreements and more announcements are expected over the next several months. UC Health is the most significant partner, however, as the only Level One trauma center in the region.
"We see a very large portion of the Medicaid population and the uninsured population in our hospital," English said. "It is disproportionately larger than our other providers because of the services we provide and the community that we serve."
Mayor Pureval says the city is committed to tracking progress on this initiative.
RELATED: Why some Ohio cities are buying, and forgiving, residents’ debt
A research paper published earlier this year looked at the effectiveness of medical debt relief programs using two randomized surveys. The economists concluded people previously helped by Undue Medical Debt did not, on average, experience better financial outcomes or an improvement in mental health.
Undue VP Ruth Landé says the study was conducted using data collected in 2018 and 2019, when the income qualifications were lower and before many cities started to provide wrap-around services alongside the debt relief. Pureval says wrap-around services are a critical part of Cincinnati's implementation plan.
"We understand that medical debt is just a small piece of the overall debt picture that so many Cincinnatians are experiencing," Pureval said. "And all of the services and partnerships that the city has, we will bring to bear in order to put that person in a better financial position and ultimately in a better position for their physical and mental health."
The letter notifying residents will include information from the city offering one-on-one help with getting health insurance, finding a primary care doctor, and any other services necessary. Residents must reach out to request those services because Undue will not share any identifying information with the city.
The services will be provided by a person in the Cincinnati Health Department. The city will offer small incentives to participants to complete a survey after having their debt forgiven.
Who will have their medical debt forgiven?
Undue Medical Debt will work with local health care systems to purchase portfolios of debt that include patients who meet the income requirements: making less than 400% of the federal poverty level, or with debt that is at least 5% of their annual income. Only city residents will have their debt forgiven using the city dollars approved by City Council; however, Undue has other funding sources and may be able to purchase and forgive debt for people who live outside the city but have debt within these health systems.
Can I request to have my medical debt forgiven?
No. Eligible residents are included based on partnerships with local health systems.
Does Undue forgive 100% of a person's medical debt?
Not necessarily. Undue forgives all of a person's medical debt that it purchases from each health care provider. A person may have medical debt with more than one health care system, including ones with no agreement with Undue.
What do I do if I get a letter?
Residents with forgiven debt don't need to do anything; there's no application necessary, and nothing required to formally accept the debt forgiveness. Residents will have the option to contact the city for additional support, but the debt will be forgiven even if they don't reach out.
