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Pittsburgh considers using $1 million from rescue plan to alleviate residents’ medical debt

Pittsburgh City Council will consider legislation that would use $1 million in American Rescue Plan Act funding to help alleviate medical debts for residents.

Councilman Bobby Wilson on Tuesday introduced a proposal Tuesday that would allow the city to partner with RIP Medical Debt, a New York based nonprofit that would buy dischargeable health care debt directly from hospitals and forgive it.

Wilson said the arrangement would forgive about $115 million in health care debt owed by about 24,000 residents in the city.

“People do not plan to get sick or get hurt, and when they do get sick or get hurt, health care isn’t just necessary but it could be a matter of life and death,” Wilson said, adding he felt that helping alleviate Such debt was a “common sense” measure.

The measure would be funded using $1 million of the $335 million the city received from the American Rescue Plan Act, President Joe Biden’s $1.9 trillion economic stimulus bill.

More than 100 million Americans — or about 41% of adults — have health care debt, according to the legislation. One in eight indebted Americans owe $10,000 or more in health care debt. It’s the most common type of debt in the nation, Wilson said, and the leading cause of personal bankruptcy.

People saddled with medical debt often struggled to pay for other necessities, Wilson said in the bill. Some people may put off seeking additional medical care or may have been denied access to a hospital or health care provider because of their debt.

“Anyone is just one medical emergency away from becoming homeless,” said Councilwoman Erika Strassburger, who is a co-sponsor on the legislation. “The bills pile up and it becomes untenable.”

Strassburger said she’d like to see a “fundamental shift” in health care and health insurance nationwide to make it more affordable. While Pittsburgh City Council cannot singlehandedly bring about such changes, she said, this legislation could be a way to make a positive impact on people struggling in the city.

“If there’s one thing we can do to make this holiday season or this next year or so a little easier to get by for Pittsburghers, then I’m happy to be a part of that,” she said.

In Allegheny County, 7% of households have health care debt in collections, according to the legislation.

RIP Medical Debt discharges health care debt by purchasing it directly from health care providers for pennies on the dollar and then discharges the debt, rather than collecting it, Wilson explained.

The nonprofit partnered with Cook County, Ill. to forgive up to $1 billion in health care debt when the county used $12 million in ARPA dollars on an agreement similar to what is proposed in Pittsburgh. Toledo partnered with Lucas County, Ohio to use $1.6 million in ARPA dollars to have RIP Medical Debt discharge about $2 million in medical debt for about 41,000 people there.

According to the proposed legislation, the partnership with RIP Medical Debt would alleviate health care debt for residents who received health care on or after March 30, 2020 and have a household income of less than four times the federal poverty level, which ranges from $13,590 for a one-person household to $46,630 for an eight-person household. People who have health care debts that are five percent or more of their annual income also would qualify.

Account balances must have been written off as bad debt, and hospitals must consider the accounts to be dormant, per the legislation. Beneficiaries will not have to pay taxes on the discharge of their debt.

Residents who qualify will receive letters stating the amount that has been discharged after local officials finalize the partnership, if the legislation is approved.

“Medical debt is a pervasive crisis across the US, which impacts the most vulnerable and often prevents them from seeking the care they need and deserve,” RIP Medical Debt President and CEO Allison Sesso said. “We’re grateful that the city of Pittsburgh acknowledges the scale of this issue.”

Council members Anthony Coghill, Ricky Burgess, R. Daniel Lavelle and Barb Warwick also have signed on as cosponsors.

Julia Felton is a Tribune Review staff writer. You can contact Julia by email at [email protected] or via Twitter .

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