May 17, 2023 | From City of New Orleans
City of New Orleans Partners with Nonprofit for Medical Debt Forgiveness for Eligible Residents
NEW ORLEANS — Mayor LaToya Cantrell today signed an agreement to establish a partnership between the City of New Orleans and the nonprofit RIP Medical Debt. This new initiative aims to forgive the existing medical debt of eligible New Orleans residents experiencing financial hardship by allocating $1.3 million in American Rescue Plan Act (ARPA) funding to establish a medical debt elimination program in the city.
“This initiative will be transformational for our most vulnerable residents who may be experiencing financial instability due to medical bills,” said Mayor LaToya Cantrell. “All of the programs we are funneling ARPA dollars toward will improve our people’s lives in several ways, from public health to overall quality of life. Medical debt is too common in our state, especially given the COVID-19 pandemic, which we know had a disproportionately hard effect on New Orleans. My administration will continue to be intentional about finding meaningful partnerships like this one to give our residents an economic boost and close the wealth gap so we can all move forward together.”
This medical debt elimination program was unanimously approved by the New Orleans City Council last December. The terms of the agreement run through the end of 2025, and during that time, RIP Medical Debt will work with local health care providers and secondary holders of medical debt to identify, purchase and cancel the medical debt of eligible residents. The New Orleans Health Department (NOHD) will oversee program operations.
“Historically, medical debt is a leading cause of bankruptcy and is directly tied to poor health outcomes, as individuals often do not seek further care if they are saddled with huge bills they can't pay,” said Dr. Jennifer Avegno, Director of NOHD. “This initiative directly ties into our Community Health Improvement Plan strategic priority of accessible healthcare. About one in seven people with debt said they’ve been denied access to a hospital, doctor or other providers because of unpaid bills. And what’s even more devastating is that many families must choose between paying off medical debt, buying food or paying their bills. This major win for patients in our city will help struggling individuals and families not have to worry.”
“Medical debt can happen to anyone. Being sick or injured shouldn’t put anyone in debt or lead them to go broke,” said Council Vice President Helena Moreno. “Plus, communities of color have been disproportionately impacted financially and medically by COVID-19. This will provide financial reset for many families which will be a boost for them and our city as a whole. It’s a tremendous way to spend one-time federal dollars.”
Eligible residents include:
- Low income, defined as having income below 400 percent of the federal poverty limit, or
- Burdened by medical debt, defined as having medical debt equal to or exceeding 5 percent of household income
For the $1.3 million expenditure, RIP Medical Debt estimates that they will be able to purchase and cancel approximately $130 million in medical debt for eligible residents. In addition to negotiating the purchase of the debt, managing the cancellation and sending notifications to residents, RIP Medical Debt will also develop recommendations based on their analysis of hospital policies and practices for reducing the accrual of patient medical debt going forward.
A December 2020 analysis of credit reports by the Consumer Financial Protection Bureau found that about 22 percent of Louisiana's population has medical debt compared to only 2.25 percent in Minnesota. Applying that rate to the New Orleans population, this program could impact roughly 80,000 residents in the city. Moreover, people of color are disproportionately impacted by medical debt. Black adults are 50 percent more likely, and Hispanic adults are 35 precent more likely, to hold medical debt compared to white residents nationally.
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