Groups Eliminate $35M in Medical Debt for 24,000 Arkansans

A group of 24 philanthropic organizations and donors is erasing $35 million in medical debt for nearly 24,000 people in Arkansas.

The not-for-profit charity RIP Medical Debt of Rye, New York, coordinated the initiative on behalf of the Winthrop Rockefeller Foundation, Arkansas Community Foundation, Hope Credit Union of Jackson, Mississippi, and other donors.

Medical debts were purchased in large, bundled portfolios for a fraction of their face value and recipients were randomly chosen based on qualifying factors and account availability. Those selected will receive a letter from RIP Medical Debt.

Recipients were chosen in all 75 counties, with an average debt of about $1,500 per individual or family being eliminated.

“Our current medical and court systems trap Arkansans in debt, harming already vulnerable populations as well as our state’s economic future,” Bill Bynum, CEO of Hope Credit Union, said in a news release. “We must enact bold policy changes to mitigate wealth-stripping practices that perpetuate debt cycles.”

The initiative was announced by the Arkansas Asset Funders Network, Arkansas Community Institute and Hope Policy Institute.

The groups also released policy recommendations to help alleviate and prevent medical debt. The recommendations include:

• Legislation to protect consumers from out-of-network medical bills
• Including medical debt elimination and protections in the state’s COVID-19 recovery plans
• Legislation to protect patients from abusive medical debt collection practices
• Limiting reporting of medical debt on credit reports
• Capping interest charged on medical debt

About 37% of Arkansans have debt in collections, according to the Urban Institute. That’s nearly 10% higher than the national average. Data shows that people of color are disproportionately affected by medical debt and related collection abuses.

“Medical debt and court costs, fines and fees create significant barriers to wealth building,” Neil Sealy, executive director of the Arkansas Community Institute, said in the release. “When individuals are unable to pay collections, it can set off a catastrophic chain reaction with lasting impacts to their financial security and economic opportunity.”

RIP Medical Debt — which was founded by two former debt collection executives — has eliminated $5.6 billion in medical debts for more than 3.1 million individuals and families since 2014.