Shortly after giving birth to a baby girl two months ago, Terry Logan received a bill from the hospital. It returns a string of numbers separated by commas.
Logan, who was a high school math teacher in Georgia, brushed it aside and ignored subsequent bills. She was a single mother who knew she had no way to pay. “I avoided it like the plague,” she said, but avoiding the bills didn’t put her out of mind.
“The weight of all that medical debt — oh man, it was tough,” Logan said. “Every day, I wonder what I owe, how I’m going to get out of this … especially with the money coming in not enough.”
Then a few months ago — nearly 13 years after her daughter was born and many anxiety attacks later — Logan got some bright yellow envelopes in the mail. They were from a non-profit group that bought it and then forgave all those past medical bills.
This time, it was a very different kind of surprise: “Wait, what? WHO by doing that?”
RIP does medical debt. The nonprofit organization grew during the Covid-19 pandemic, freeing patients from medical debt, thousands at a time. Its novel approach involves buying bundles of outstanding hospital bills — debts incurred by low-income patients like Logan — and then simply wiping out their payment obligations.
It’s a model created by two former debt collectors, Craig Antico and Jerry Ashton, who made their careers chasing patients who couldn’t pay their bills.
“They’ll have conversations with people on the phone, and they’ll understand and get a better insight into the struggles that people were challenged with,” said Alison Sesso, RIP’s CEO. Eventually, they realized they were in a unique position to help people and shifted gears from debt collection to philanthropy.
Ashton’s change of heart began in 2011 when he met activists from the Occupy Wall Street movement who spoke to him about freeing Americans from their debt burden. “Having collected millions of dollars in medical-related bills during my career as a bill collector, now all of a sudden I’ve reformed: I’m a predatory donor,” Ashton said in a video on FreeThink, a new media journalism site.
After years of helping Occupy Wall Street activists buy debt, Antico and Ashton launched RIP Medical Debt in 2014. They began raising money from donors to buy debt in the secondary market — where hospitals sell debt to for-profit companies for pennies on the dollar when they collect on that debt.
RIP buys debts like any other collection company — instead of trying to make a profit, it sends customers notices that their debts have been paid. To date, RIP has purchased $6.7 billion in delinquent loans and released 3.6 million people from debt. The group said that $100 in debt costs an average of $1 to retire.
RIP gives his blessings at random. Seso said it depends on which hospital loans are available for purchase. “So nobody can come to us, raise their hand and say, ‘I want you to release my debt,'” he said.
Yet RIP is expanding the pool of those eligible for relief. As inflation and job losses strain more families, the group now buys delinquent loans for those who make more than two to four times the federal poverty level, Seso said.
A recent wave of donations — from college students to philanthropist Mackenzie Scott, who gave $50 million by the end of 2020 — is accelerating RIP’s expansion. The money enabled RIP to hire staff and develop software to comb through databases and quickly identify targeted loans.
New regulations allow RIPs to purchase loans directly from hospitals, rather than through the secondary market, expanding access to loans.
Seso says the group is constantly looking for new loans to buy from hospitals: “Call us! We want to talk to every hospital that is interested in retiring the debt.”
Sesso insists that RIP’s booming business is nothing to celebrate. This means that millions of people are victimized by a US insurance and health care system that is too expensive and too complicated for most people to navigate. As KHN and NPR reported, more than half of U.S. adults said they went into debt due to medical or dental bills in the past five years, according to the KFF poll. A quarter of adults with health care debt owe more than $5,000. And nearly 1 in 5 people with any amount of debt say they never expect to pay it off.
RIP is the only way patients can get immediate relief from such debt, said Jim Branscombe, a major donor. Policy change is slow. Numerous factors contribute to medical debt, he said, and many are difficult to address: rising hospital and drug costs, high out-of-pocket costs, less generous insurance coverage and widening racial disparities in medical debt. The pandemic, Branscom added, has exacerbated all of this.
“The pandemic has made it even harder for people to run up incredible medical bills that aren’t covered,” Branscom said. He is a longtime advocate for the poor in Appalachia, where he grew up and where he says chronic disease worsens medical debt. This undermines the issue of first care, she said: “There is stress and frustration.”
For former math teacher Terri Logan, her exorbitant medical bills added more stress to her life, which then turned into debilitating anxiety and depression. Now a single mother of two, she describes the stress of living with debt hanging over her head. He had panic attacks, which included “pains that shoot through the left side of your body and make you feel like you’re going to have an aneurysm and you’re going to pass out,” he recalls.
Some hospitals say they want to alleviate that destructive cycle for their patients. Haywood Health Care System in Massachusetts donated $800,000 in medical debt to RIP in January, essentially giving back control of that debt because patients with outstanding bills were avoiding treatment.
“We wanted to take away at least one of the pressures of avoiding getting people to the door to get the care they need,” said Don Casavant, Haywood’s head of philanthropy. Also, he said, “it’s likely that the debt would not have been collected anyway.”
One criticism of RIP’s approach is that it’s not preventative: The group spent years reporting financial stress and credit score damage that hurt patients’ chances of renting an apartment or securing a car loan. (The three major credit rating agencies recently announced changes to the way medical debt is reported, reducing credit score damage somewhat. However, consumers often take out second mortgages or credit cards to pay for medical services.)
“By the time they come to release that debt, a lot of damage is done,” said Mark Rukavina, program director of Community Catalyst, a consumer advocacy group.
Rukavina said state laws should force hospitals to make better use of their financial assistance programs to help patients. “Hospitals shouldn’t be paying,” he said. “Basically, don’t reward bad behavior.”
Most hospitals in the country are not-for-profit and must offer community benefit programs, often called “charity care,” in return for that tax status. Depending on the hospital, these programs reduce costs for patients who earn two to three times the federal poverty level. But many eligible patients never find out about charity care — or aren’t told. They are billed in full and then seized by the collection agency if they do not pay.
Recently, RIP has started trying to change that too.
RIP CEO Sesso said the group is advising hospitals on how to improve their internal financial systems so they better screen patients eligible for charity care — in short, prevent people from incurring debt in the first place. Ultimately, it’s a better outcome, he said.
“We like that hospitals reduce the amount of work we need on the back end,” he said. “I would say hospitals are open to feedback, but they’re also somewhat blind to how poorly their financial support systems are working.”
Terri Logan said no one referred her to charity care or financial assistance programs when she was born. Nor did Logan realize that help exists for people like him, who have jobs and health insurance but who don’t make enough money to qualify for supports like food stamps.
Hate overshadows him, darkens his soul. “I don’t know; I just lost my mojo,” she said. “But I’m finding it,” he added. Logan’s newfound freedom from medical debt is rekindling a long-dormant dream of singing on stage.
His first performance is scheduled for this summer.
About this project
“Diagnosis: Debt” is a reporting partnership between KHN and NPR that explores the scale, impact and causes of medical debt in America.
The series draws on the “KFF Health Care Debt Survey,” a poll designed and analyzed by KFF’s public opinion researchers in collaboration with KHN reporters and editors. The survey was conducted online and by telephone in English and Spanish from February 25 to March 20, 2022, among a nationally representative sample of 2,375 US adults, including 1,292 adults with current health care debt and 382 adults who had health care debt. last five years The margin of sampling error is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current debt. For results based on subgroups, the margin of sampling error may be higher.
Additional research was conducted by the Urban Institute, which analyzed credit bureau and other demographic data on poverty, race and health status to explore where medical debt is concentrated in the United States and what factors are associated with high debt levels.
The JPMorgan Chase Institute analyzed records from a sample of Chase credit card holders to determine whether customers’ balances could be affected by major medical expenses.
Reporters from KHN and NPR also conducted hundreds of interviews with patients across the country; spoke to physicians, health industry leaders, consumer advocates, debt lawyers and researchers; And review studies and survey scores about medical debt.