Jan 23, 2024 - Health

New York joins cities erasing medical debt

Illustration of a medical red cross attached to a chain and anklet which has been opened by a key

Illustration: Annelise Capossela/Axios

A New York City plan to buy up medical debt for up to a half-million low- and middle-income residents could erase over $2 billion in medical bills, city officials said.

Why it matters: It marks the largest municipal effort yet to wipe out medical debt, a leading cause of personal bankruptcy and a threat to people's health.

Details: New York is investing $18 million over three years in a partnership with the nonprofit RIP Medical Debt, which buys up medical debt in bulk on the cheap.

  • There's no application process — residents will be told if their debt has been paid off.

The big picture: The federal government has taken steps to erase medical debt from credit scores, while states have sought other measures to ease the financial burden.

  • But a growing number of cities and counties are simply wiping the slate clean for some residents struggling with medical bills.
  • Among those that have leveraged federal pandemic relief funds to erase medical debt are Illinois' Cook County (which has eliminated $281 million for nearly 160,000 people), New Orleans and St. Paul.

Los Angeles County, the nation's most populated, is weighing a plan to eliminate over $2 billion in medical debt.

  • A county report last summer found that about 810,000 residents have medical debt, with disproportionate impacts on lower-income and minority residents.

Go deeper: When medical debt is forgiven

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