St. Paul wipes out nearly $40 million in medical debt for 32K residents
ST. PAUL, Minn. (FOX 9) - St. Paul Mayor Melvin Carter announced on Tuesday that thousands of city residents are getting nearly $40 million of medical debt wiped out.
What we know
The Medical Debt Reset Initiative was proposed by Mayor Carter during the 2024 budget address and planned to use $1.1 million in funds from the American Rescue Plan to help provide an estimated $110 million in medical debt relief for qualifying St. Paul residents, according to a press release.
Mayor Carter held a press conference Tuesday saying 32,000 residents would receive a notice in the mail that their medical debts have been purchased by the city and eliminated on their behalf. The average debt is $268 while the largest debt is $140,972, according to officials.
Officials say they partnered with Undue Medical Debt, which uses donated funds to buy large portfolios of unpaid medical debts for pennies on the dollar, then informs people that their debt is gone. So far, the organization said it has gotten rid of $14 billion in debt for over 9 million people around the country.
The city hopes to provide additional relief for St. Paul residents, and officials said the current requirements are that the person has an income that is four times the federal poverty level or below, or the debt is more than 5% of their income.
What they're saying
"Every day, millions of Americans face the impossible choice between paying medical bills and covering their basic needs. Nearly half of all bankruptcies are linked to medical debt, and nearly 50% of adults have delayed or skipped care due to debt… This is about more than just eliminating debt. This is about eliminating one of the greatest barriers to health care access, giving people the chance to take control of their own health," Carter said during the press conference.
"There's no reason why this policy should not be extended throughout the state of Minnesota. Because Minnesotans, in fact, are struggling under the weight of medical debt," added Minnesota Attorney General Keith Ellison.
Background
The city previously announced plans to team up with the national organization, RIP Medical Debt, for the program. There was an income criterion for residents, but for every dollar invested, $100 in medical debt is relieved. At least four large local health systems supported the initiative, including M Health Fairview, HealthPartners, Allina Health, and Children's.
RIP Medical Debt has previously said the initiative will help improve patients' credit scores and increase access to medical care. City leaders have noted that medical debt is more prevalent in communities of color.
"This program is not just about wiping away debts; it is about giving people a chance to breathe, to rebuild, and to reclaim their lives without the weight of medical bills crushing their aspirations," Carter said in August.
Other laws aiming to help the burden of medical debt have gone into effect this year. Minnesota Gov. Tim Walz signed the Debt Fairness Act, which bans the automatic transfer of medical debt to a spouse, bans reporting medical debt to credit bureaus, and bans denying necessary medical care on the basis on unpaid bills.
Starting in October, health care providers can no longer deny "medically necessary treatment" or services because of previous outstanding debt. And for those facing an outstanding balance, collection agencies have new restrictions on how they collect medical debt.