A bill introduced to Pittsburgh City Council Tuesday would commit federal pandemic aid toward relieving about $115 million of health care debt.
Under a proposal by City Councilor Bobby Wilson, the city would spend $1 million through a nonprofit medical debt collector, which would buy up and discharge eligible debt for pennies on the dollar.
“Coming out of this global pandemic, Pittsburghers deserve such direct relief,” Wilson said during a press conference before he sponsored the bill Tuesday. “With this legislation, I look forward to making Pittsburgh a national leader in reducing the burden of medical debt on our citizens.”
The bill proposes hiring RIP Medical Debt, a New York-based nonprofit medical debt collector, to purchase dischargeable health care debt from hospitals in bundles. RIP Medical Debt buys debts the same way other collection companies do — except instead of trying to profit, they notify consumers that their debt has been cleared.
City Councilor Solicitor Dan Friedson said he supports the program but was not yet sure it had legal standing. He said he would work with Wilson to determine the legal path forward. “With proper process, this can be legal,” he told WESA.
Pittsburgh’s plan would follow the lead of Cook County, Illinois — which includes Chicago — and Toledo, Ohio where local governments launched similar programs this year to partner with RIP Medical Debt using federal coronavirus aid. Cook County allocated $12 million in federal money, with plans to forgive as much as $1 billion in debt. Toledo announced last month it will grant RIP Medical Debt $1.6 million to forgive up to $240 million.
To be eligible for debt help, Pittsburghers would have to have health care debts that are more than 5% of their income, or have a household income that ranges from $13,590 (for a one-person household) to $46,630 (for a household of eight ). Residents must owe for health care received on or after March 30, 2020. Account balances must have been written off as bad debt, and hospitals must consider the accounts to be dormant.
Residents would not apply for the program. Instead, RIP Medical Debt would bring eligible debt to the city to be discharged.
The nonprofit has worked with churches in Mt. Lebanon, Peters Township and Canonsburg this year to forgive $5 million in medical debt. A recent Kaiser Family Foundation study found that debt from past medical and dental bills is a widespread problem in America, impacting people with and without insurance.
“Medical debt is a pervasive crisis across the US which impacts the most vulnerable, and often prevents them from seeking the care they need,” said RIP Medical Debt CEO and president Allison Sesso. “We look forward to engaging with local hospitals and other providers.”
How soon could Pittsburghers see relief?
While most council members supported the goal of the program, some voiced concerns during a budget hearing Tuesday about how it would move forward.
Council has been putting the finishing touches on the 2023 budget, and it gave preliminary approval to fund the debt-relief program with federal dollars previously designated for streetlight replacement. Council also raided the streetlight budget to replenish $3 million transferred from the city’s land bank, which had previously lost funding to a new program to address food insecurity.
The transfers upset Bruce Kraus, who said that scaling back investments in street lighting would be a “betrayal” of constituents who have been asking for better street safety.
“My residents in Beltzhoover and Knoxville would hang me in effigy,” he said. “They have advocated for improved lighting in alleyways and side streets and back streets for the years I’ve been in here. And we have been promising them.”
Councilor Barb Warwick she has some reservations about how much medical debt the city might buy from large nonprofit medical providers like UPMC.
“We’re in this city with these massive nonprofits,” Warwick noted. “And here we’re talking about using $1 million of funding to pay for the debt that they are putting on the shoulders of our residents, many of whom actually work for those companies.”
A 2019 SEIU survey found that hundreds of workers at UPMC Presbyterian and Shadyside hospitals owed medical debt to their employer, a $24 billion global health system.
Other council members, including Deb Gross, said they wanted more time to vet RIP Medical and to understand the scope of the medical-debt problem. And council President Theresa Kail-Smith questioned whether erasing medical debt was the responsibility of city government.
“We’re elected to do things like pave roads, make sure sidewalks are safe and passable and ADA accessible, to make sure the trees are being trimmed and bridges aren’t falling down,” she said.
Councilor Erika Strassburger said she strongly supports the proposal, but stressed that the city can’t fix the health care system on its own.
“That’s not something the city can do by itself,” she said. “It’s a national crisis.”
Wilson said he would be willing to hold the bill to address the concerns of other members. He said he planned to ask RIP Medical Debt to come before council to discuss how its programs have worked elsewhere.