NEW YORK–A nonprofit organization said it has entered into a deal that will pay off old medical bills for an estimated 20 million people.
According to Undue Medical Debt, which buys patient debt, it will be paying off $30 billion worth of unpaid bills in a single transaction with Pendrick Capital Partners, a Virginia-based debt trading company. The average patient debt being retired is $1,100, according to Undue Medical Debt, with some reaching the hundreds of thousands of dollars, National Public Radio reported.
“The deal will prevent the debt being sold and protect millions of people nationwide from being targeted by collectors, though this will overwhelmingly benefit residents of Texas and Florida, who account for about half of the debts being retired,” NPR reported.
Still Not Enough
And yet despite the $30-billion in debt figure, even proponents of retiring patient debt acknowledge that such purchases cannot solve a crisis that now touches approximately 100-million people in the U.S., NPR stated
The report noted that in the past year alone, Americans borrowed an estimated $74 billion to pay for health care, according to s survey conducted by West Health-Galluyp. It is expected that those who benefit from Undue’s debt relief may have other medical debt that won’t be relieved.
‘Highlights the Challenges’
“This large purchase also highlights the challenges that debt collectors, hospitals, and other health care providers face as patients rack up big bills that aren’t covered by their health insurance,” the report added.
NPR noted that Undue Medical Debt pioneered its debt relief strategy a decade ago, using charitable donations to buy medical debt from debt trading companies at steeply discounted prices and then freeing patients from the obligation to pay.
“The nonprofit now buys debts directly from hospitals, as well. And it is working with about two dozen state and local governments to leverage public money to relieve medical debt in communities from Los Angeles County to Cleveland to the state of Connecticut,” the report added.
Method is Controversial
But NPR also noted the debt retirement strategy has been controversial, and Undue Medical Debt’s record-setting purchase — financed by a mix of philanthropy and taxpayer dollars — is likely to “stoke more debate over the value of paying collectors for medical debts.”
