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St. Paul’s plan to abolish $110 million in medical debt

(Courtesy of RIP Medical Debt)

When St. Paul Mayor Melvin Carter announced his 2024 budget proposal on August 10, he said that St. Paul is set to abolish $110 million in medical debt. So how exactly does it work?

The organization behind the buyout is RIP Medical Debt, which mimics for-profit debt buyers to purchase medical debt for pennies on the dollar; specifically, 10 pennies for each dollar. If the mayor’s budget is passed by the city council, the city will invest $1.1 million into the organization, which it will use to wipe out $110 million dollars in medical debt.

Allison Sesso, the president of RIP Medical Debt, says the investment could eliminate the debt of as many as 45,000 people.

“We have a big underinsured problem here in the United States. A lot of the medical debts we are relieving are people who have insurance, but the insurance is not robust enough,” Sesso said. “And so when they go to the doctor they get the treatment they need, and then they get a bill and to their surprise, they have a very high deductible.”

Sesso said that the purpose of the buyout is to encourage people to not avoid seeking the medical care they need, and that the entire concept of medical debt is a systemic failure that should not weigh on people’s decisions.

“A lot of people unfortunately avoid going to the doctor because they worry about additional medical debt when they’re already in medical debt,” Sesso said. “Their lives and their wellbeing is being undermined because of the fact that they have the stress of knowing they owe a debt.”

RIP Medical debt has forgiven nearly $10 billion dollars in medical debt for 7 million people nationwide.

The City of St. Paul still has to pass the budget, and is holding public hearings until the end of the year. If this portion of the budget is passed, RIP Medical Debt will then create a contract with the city and with hospitals around the city to purchase the debt.

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