Lifting Generations Out of Debt through Medical Debt Elimination

Why this investment?

During the pandemic, medical debt, which is the leading cause of bankruptcy in the United States, emerged as a central concern for the City of Columbus. Ohio’s low-wage essential workers and workers of color were disproportionately impacted by the pandemic. In 2021, 38 percent of Ohio’s households were economically insecure, including 59 percent of Black households, 48 percent of Hispanic households, and 35 percent of white households. An analysis by United Way Ohio found that the material conditions of economically insecure households worsened since 2021, including “food insufficiency, continued difficulty paying bills, medical debt, reduced savings, and elevated feelings of anxiety and depression.” In addition to presenting an additional economic burden for families already struggling with massive job losses and income reductions, medical debt presents a barrier to healthcare. 

After focusing its initial ARPA investments on emergency cash assistance, Columbus was looking to make some longer-term, transformational investments to benefit communities disproportionately impacted by the pandemic. Former Council President Pro Tem Lizabeth Brown began the process of developing legislation to tackle medical debt, and her successor Rob Dorans picked up the mantle after Brown resigned in November 2022.

What is this investment?

Columbus’s Medical Debt Relief program was carried out by a public-private partnership between the city government and the Central Ohio Hospital Council—a nonprofit organization that includes four major hospitals of the City: Mount Carmel Health System, Nationwide Children’s Hospital, the Ohio State University Wexner Medical Center, and OhioHealth. 

The City’s original idea was to partner with Undue Medical Debt to purchase and absolve the debt as Cook County, Toledo, and other jurisdictions had done. But when Dorans convened the area hospitals to discuss the legislation, they were hesitant about the program model. Their concern was partly due to a lack of trust, but also because their charity policies ensured that people living at below 200 percent of poverty did not accrue debt, and for more than five years they’d not sold medical debt on the secondary market. The City and the Central Ohio Hospital Council came up with their own solution: The hospitals would absolve the debt themselves, and the City would use ARPA funds to support their associated administrative expenses to identify and notify beneficiaries. 

While the City did not formally partner with Undue Medical Debt to implement the program, Undue provided valuable advice and the Columbus program followed Undue’s blueprint in terms of capping eligibility at 400 percent of the federal poverty level and sending out letters to all eligible individuals explaining that the debt was relieved, with no application process and no strings attached.

The hospitals’ ownership of the issue eliminated the need to spend public dollars purchasing the medical debt, enabling a significantly larger-scale program at a much lower cost to the City. While the original proposal was to pay $2 million to Undue Medical Debt to purchase and eliminate approximately $200 million in debt, the hospital-led solution cost the City $500,000 to retire $335 million in debt—a $1 to $670 return on investment. 

Collaboration among Columbus’s hospitals and between the City and the hospitals made the medical debt relief program possible. Through the Central Ohio Hospital Council, the City’s four major hospitals had already aligned their charity and medical debt policies and had the structures in place to implement a coordinated debt relief program. Dorans also points to the “translation” work between City staff most concerned with resident impact, health care system finance staff most concerned about the bottom line, and health system government affairs staff most concerned about hospital reputation as critical to getting to a workable solution.

Centering equity in the program

Columbus’s medical debt relief program grew out of the City’s interest in making generational investments to increase economic resilience among low-income residents most impacted by the pandemic—particularly families of color and service workers, who are disproportionately burdened by medical debt. People with medical debt often forego medical treatment, undermining health. Dorans says that many residents with medical debt described this consequence during public hearings and community outreach as the program was being developed. The absence of an application and selection process for debt holders, as well as universal eligibility within a broad income threshold, are other elements of equitable implementation.

One downside of not partnering with Undue Medical Debt is that the ARPA-supported program was limited to Columbus residents, even though the hospital system serves many low-income households outside the City. In the cases of Toledo and other places that partnered with Undue, the nonprofit was able to leverage other funding sources to clear the debts of all patients meeting the income threshold, regardless of their address.

Outcome to date

The program eliminated the medical debts of 340,660 Columbus residents, with an average debt relief of $984 per person for a total of $335,213,212 in debt relief.

Toward transformative change

Like elsewhere, Columbus’s medical debt relief program wiped the slate clean for debt holders, but did not change any of the issues underlying debt accumulation in the first place. Developing the medical debt relief program created an important learning process for all involved. While the hospitals were cautious not to send any signals to prevent people from paying their medical bills, the hospitals learned about the limits of their charity care policies through the process, and how medical debt affects communities. For the City, the ARPA funds began an important discussion. “We know a lot more about this issue than we ever had before,” Dorans says. “And that’s oftentimes the first way that you start thinking systemically about a solution.” While the future is uncertain, Dorans says the conversation is not over.