Last month, New York Mayor Eric Adams (D) announced a plan to spend $18 million to buy and forgive about $2 billion in medical debt over three years, relieving as many as half a million people. He’s not the only government leader to try out this tactic. City leaders in New Orleans and Washington have announced similar plans, as have the governors of Pennsylvania, Illinois and Connecticut.
We are longtime proponents for what have become known as “debt jubilees” — a powerful tool allowing Americans to highlight and help ease the scourge of medical debt. One of us, Astra, helped start this trend in 2012 by co-founding the Rolling Jubilee, an offshoot of the Occupy Wall Street movement that would go on to erase hundreds of millions of dollars in medical, probation, utility and tuition debt. Rolling Jubilee organizers broke ground by figuring out how to purchase portfolios of unsecured debt on secondary debt markets just like debt collectors do, but with the mission of wiping out people’s balances instead of collecting. Our ultimate goal was to strengthen a movement of debtors that would demand government action to deliver relief.
You might assume we would be overjoyed to hear that governments are now replicating our efforts. But though these plans will help some people burdened by medical debt, we are frustrated to see that elected officials missed the larger point. Eliminating debt is helpful, but these officials should be much more focused on preventing people from falling into medical debt in the first place. Governments, after all, possess a range of tools that activists don’t.
In their announced plans, government officials say they will purchase the debts of low-income patients from hospitals or third-party debt buyers. These collectors often hound impoverished patients for years. An overwhelming portion of these debts are uncollectible, mainly because of patients’ inability to pay. This is why the debts can be purchased for pennies on the dollar.
However, much of this debt should never have existed at all. In the United States, the majority of hospitals are private nonprofits and are required to have written financial assistance policies specifying the income levels below which patients should qualify for free or discounted care. By its own admission, much of the debt purchased by RIP Medical Debt, the nonprofit helping these governments eliminate medical debt, falls below these cutoffs. Governments, then, are using public funds to pay hospitals for the debts of many patients who should have received financial assistance.
Instead of bailing out uncharitable hospitals that are failing to meet their legal obligations, public officials should make it easier for patients to obtain the financial assistance to which they are entitled. Hospitals often demand onerous, difficult-to-find applications from patients to prove their eligibility for charity care. But the law can lower these barriers: for instance, hospitals can be required to grant eligibility for financial assistance to patients enrolled in certain public benefits, such as food stamps.
Public officials can also halt the worst abuses of the medical debt collection machine. Hospitals should be forbidden from denying care to patients in debt. They should not be permitted to sue patients for medical debt, garnish their wages, seize their bank accounts, foreclose on their homes or seek warrants for their arrest — all standard practice in the United States today. State power should be used to protect residents from systemic abuses, not marshaled to discipline and punish the destitute sick.
State and local governments should also ensure that our struggling public hospitals, those chronically underfunded bastions of care for so many uninsured and publicly insured Americans, get the resources they need. That would cost more than one-off purchases of old debts, but it would do far more to end our two-tiered system of care.
The private nonprofits that make up the majority of hospitals in the United States have their origins in almshouses and religious orders. In return for their tax exemptions, they are legally obligated to provide community benefits — but in practice, 86 percent spend less on charity care than they receive in tax breaks. Our public officials should threaten to revoke tax exemptions for hospitals that do not provide sufficient community benefit.
Buying and erasing medical debt was never meant to be a lasting solution. It was, in its earliest iteration, a demonstration of the absurdity and inhumanity of our current system, meant to underscore that the problem of medical debt can only truly be solved by the provision of universal health care. Today, an estimated 100 million people owe more than $140 billion in unpaid medical bills. To lessen that burden, state and local officials should use our collective resources and regulations to transform hospitals into the communal centers of care that they can and should be.