The City of Cleveland will cancel the medical debt of an estimated 50,000 residents, about 15 to 16% of households, the city council announced Monday.
The legislation, which is expected to pass at the city council meeting tonight, will use $1.9 million in American Rescue Plan Act (ARPA) funds to clear an estimated $190 million of debt, officials announced at a press conference Monday.
Ward 13 Councilmember Kris Harsh, who represents Old Brooklyn and part of the Stockyard neighborhoods, was one of the members who introduced the legislation.
“Medical debt is like a monkey on your back. It never goes away. You think about it constantly," said Harsh. "It interferes with your credit score. When you try to buy that house or get a car, your medical debt could be a detractor keeping you from making those next steps in your life.”
The city will contract with RIP Medical Debt, a nonprofit that is working to cancel medical debt in municipalities, including Toledo and New Orleans. The group said it buys large bundles of past-due medical debt for "pennies on the dollar" directly from hospitals and debt collectors.
Residents don't have to apply for the relief, city representatives said. Instead, as RIP Medical Debt buys bundles of debt, residents will receive a letter in the mail. The letter will come from RIP Medical Debt.
The plan is in line with its commitment to resolving inequities and "brings tangible, direct help to Cleveland residents," the city council said in a media release.
Councilmembers said data shows those who hold medical debt, especially large medical debts, are on average lower income and people of color.
“The people that we've talked to in the neighborhoods are excited about this," said Council President Blaine Griffin. "Everybody that we know in our neighborhoods are dealing with this kind of an issue."
To qualify, a person must be a city resident and have an income at four times the poverty level or below or have medical debt that is 5% or more of their annual income, according to the release.
The process of negotiating with providers and debt collectors to buy the unpaid debt could take several years, said RIP Medical Debt's Keith Hearle. The organization hasn't reached out to Cleveland area hospitals yet.
The debt will be cleared in a one-time payment, meaning any additional unpaid medical bills accrued after the letters are sent out will not be canceled, Griffin said.
He said the city council is always looking for ways to increase preventative and charity care for residents saddled with high medical bills because chronic medical problems can drive up medical costs.
"We have to do a better job of really addressing some of the community health needs," Griffin said. "That's where I think a lot of hospitals are trying to move."
