How not-for-profits help millions tackle their medical debt

Nikiesha Barnett had knee surgery in 2006 and took unpaid leave from her job as a Georgia hospital coordinator while she was recovering. When Barnett wasn’t able to keep up with the payments for the surgery, she ended up owing about $4,500.

That debt lingered for almost 14 years until one day in 2020, she received a letter from a not-for-profit telling her the debt had been relieved. RIP Medical Debt, a national not-for-profit, had bought her debt and forgiven it.

Barrett says when she was in debt, she felt too guilty about what she owed to go to the doctor. Now that concern has been wiped away.

Barnett is one of the millions of Americans who’ve had medical debt paid by not-for-profits that receive increased support from a wide variety of grantmakers and donors, including MacKenzie Scott. Scott gave RIP Medical Debt $30 million in November after awarding the organization $50 million in 2020.

That support has fueled RIP Medical Debt’s far-reaching debt relief. The not-for-profit has cleared more than $7 billion of debt since it was founded in 2014 and helped more than 4 million families.

As not-for-profits have expanded their efforts, they’re taking a dual approach—paying off debt and pushing for legislative change to prevent or alleviate that debt, such as by expanding Medicaid eligibility.

More than half of adults in the United States have gone into debt because of medical or dental bills in the past five years, according to an analysis by the Kaiser Family Foundation. Black and Hispanic adults are disproportionately burdened by medical debt. States in the South also see higher rates of medical debt.

RIP Medical Debt has gained support from other sources beyond Scott. Individual donors, corporations, and grantmakers provided $17.3 million last year, about 8% more than its previous best fundraising year.

Dollar For, a national not-for-profit that helps patients get financial assistance from hospitals, increased its budget from $350,000 last year to more than $1 million this year. One big grant came from Draper Richards Kaplan Foundation, which is giving the not-for-profit $300,000 total over three years.

Not-for-profits that help with medical debt at the local and state levels also have received a boost in giving. The Robert Wood Johnson Foundation gave $2.4 million to Community Catalyst, a health policy not-for-profit that gives aid to small groups that work with hospitals on their financial policies and advocate for new policies.

Also, the Annie E. Casey Foundation has made grants to groups addressing medical debt such as the Tennessee Justice Center over the past five years. It contributed about $1.7 million to organizations dealing with debt in 2019. At least $356,200 of that was directed to medical debt.

More foundations and people are giving for various reasons. Jared Walker, founder of Dollar For, says the COVID-19 pandemic helped more people become aware of the urgency of the issue and inspired donors to give more.

Allison Sesso, executive director of RIP Medical Debt, adds that some of the increase in funding is because donors want to see immediate help for those with debt.

“There’s a lot of frustration with our elected officials in terms of them moving and solving issues, and we give an opportunity for people to have relief right now,” Sesso says.

Two former debt collection executives, Jerry Ashton and Craig Antico, founded RIP Medical Debt in 2014. The organization buys the medical debt of low income people in bulk from hospitals and debt collectors at a reduced cost.

RIP Medical Debt used the initial grant from Scott to bolster cybersecurity to protect the health and financial data it collects and improve software that combs through hospital data to identify groups of people eligible for debt relief. It has also used the funding to pay local organizations to help RIP Medical Debt connect with new hospitals to build new partnerships and purchase their debt.

There are limitations to RIP Medical Debt’s original approach, as it helps people after they have gone into debt. The not-for-profit has increasingly backed efforts to change policy as well. It recently supported a ballot proposal in Arizona to limit interest rates charged for medical debt and actions against debtors, which voters approved in November.

But Sesso says the systemic solutions that would prevent debt aren’t coming soon enough to negate the not-for-profit’s debt relief work.

Meanwhile, Dollar For, which started in 2012, has helped relieve more than $20 million of debt. It does so by helping people access charity care, which not-for-profit hospitals are required to provide to low-income patients. In some cases, charity care pays all of a patient’s expenses; in others, it covers a portion. Many eligible patients aren’t aware they can access charity care, and not-for-profit hospitals have been criticized for seeking payments from low income people who qualify for financial assistance.

An increase in individual donors and grants since 2021 brought the not-for-profit’s budget to more than $1 million in 2022. That increase allowed Walker, the organization’s sole employee, to bring on six additional staff members.

For the Draper Richards Kaplan Foundation, Dollar For has a promising approach to give immediate help to people facing medical debt. While debt forgiveness and advocacy are important, the foundation’s CEO Jim Bildner and managing director Oliver Rothschild say that those approaches have drawbacks. The former comes after people have suffered from medical debt, and the latter can take years to result in change.

“The organizations we see making the greatest difference in the lives of others are those that have identified existing legislation that should be helping folks in real time, and in this case, with their medical debt,” Bildner says.

While groups combating medical debt have seen an influx of funding, most national philanthropies haven’t put an emphasis on the issue, says June Glover, a senior program officer at the Robert Wood Johnson Foundation.

“This issue of medical debt will start to come to the forefront again as more states broaden coverage and more Americans are covered, because that’s like the upstream intervention,” she says.

In addition, across the South, the Annie E. Casey Foundation leads the Southern Partnership to Reduce Debt initiative, which funds organizations that reduce different types of debt. One of its grantees, the Tennessee Justice Center, helped eliminate $420,488 in medical debt for eight people in 2021. The center also trains health care providers and other not-for-profits as they work to increase the number of people enrolled in Medicaid.

Other local not-for-profits are helping reduce the consequences of medical debt by pressing for policy changes. Economic Action Maryland, formerly known as the Maryland Consumer Rights Coalition, also advocated for several new state laws in the past two years.

The Maryland not-for-profit is also raising money to replenish its Medical Debt Freedom Fund, which pays off up to $1,000 in medical debt for people in the state. Since 2020, the fund has distributed about $15,000.

But even if it raises more to distribute, that won’t help enough people, says Marceline White, the not-for-profit’s executive director. However, she says, “if you pass laws, you’re able to help hundreds of thousands of people across the state.”

This article was provided to The Associated Press by the Chronicle of Philanthropy. Kay Dervishi is a staff writer at the Chronicle. The AP and the Chronicle receive support from the Lilly Endowment for coverage of philanthropy and not-for-profits. The AP and the Chronicle are solely responsible for all content.