Medical Debt is a Systems Failure, Not a Personal Failure
Medical debt deepens inequity and the healthcare affordability crisis in our country.
77% of American households are in debt, and from 2017 to 2021, there were over three million personal bankruptcy filings. There’s a stigma around debt and bankruptcy, like some moral failing or irresponsibility of the person. But the truth is, for the majority of cases, people are forced to decide between debt and their health. They’re paying for their medications. Or a life-saving surgery. Healthcare is so expensive in this country. Americans simply can’t afford it.
Medical bills are the most common reason for bankruptcy. And as the pandemic lingers, and a potential recession looms, medical debt remains a barrier for many in securing economic stability and good health, especially for marginalized communities.
Medical debt deepens inequity and the healthcare affordability crisis in our country. The stories of people affected by medical debt shine a light on the toxic stress and stigma that comes with medical debt, increasing the urgency for solutions and a shift in the narrative about medical debt from personal failure to systems failure.
In this episode, we speak to Allison Sesso, CEO of RIP Medical Debt, a non-profit that buys medical debt at a steep discount… and then wipes it out entirely. Beneficiaries receive a letter that their debt has been erased. They have no tax consequences or penalties. Just like that, they’re free of medical debt.
Topics covered:
The magnitude of the medical debt crisis in the US
The impact of the pandemic had on medical debt
The mental health component of living with medical debt
How people with medical debt are avoiding necessary care
Misconceptions about medical debt and medical debt relief
How RIP Medical Debt works, and what needs to change systemically to really fix the problem
About RIP Medical Debt
RIP Medical Debt (RIP) is a national 501(c)(3) nonprofit that was founded in 2014 by former debt collectors. To date RIP has acquired—and abolished—over $8.8 billion of burdensome medical debt, helping over 5.5 million families and addressing a major social determinant of health. RIP purchases debts for a fraction of their face value in bundled portfolios and partners with individuals, faith-based organizations, government, foundations, and corporations to empower donors by converting every dollar contributed into $100 of medical debt relief on average.
RIP also partners with hospitals, health systems, and physician groups to acquire medical debt for abolishment. RIP rose to national prominence on an episode of HBO’s “Last Week Tonight with John Oliver,” in which RIP facilitated the abolishment of $15M in medical debt. To learn more, visit ripmedicaldebt.org.
About Allison Sesso
Allison Sesso became the President / CEO of RIP Medical Debt in January of 2020. RIP Medical Debt was established for the sole purpose of reducing the medical debt burdens of low-income individuals with limited capacity to pay their medical bills by leveraging donations from people across the country. They have abolished $8,520,147,644 to date for over 5,492,948 people.
Under Allison’s leadership and in response to the COVID-19 pandemic, RIP Medical Debt launched the “Helping COVID Heroes Fund” focused on relieving the medical debts of healthcare workers and emergency responders like nurses, home health aids, pharmacists, social workers, hospital technicians, the National Guard and others working on the front lines of the pandemic. It also benefits service workers and others facing financial hardship resulting from the COVID induced economic downturn. Through this effort RIP has abolished over $100 million in medical debt.
Prior to joining RIP Medical Debt, Allison served as the Executive Director of the Human Services Council of New York (HSC), an association of 170 nonprofits delivering 90% of human services in New York City.
Under her leadership HSC pioneered the development of nationally recognized tools designed to illuminate risks associated with government contracts, including an RFP rater and government agency grading system. She led negotiations with New York City and State government on behalf of the sector and successfully pushed for over $500 million in investments to address the nonprofit fiscal crisis.
During her tenure at HSC, Allison also led a commission of experts focused on socialdeterminants of health and value-based-payment structures and published the report,Integrating Health and Human Services: a Blueprint for Partnership and Action, that examines the challenges of operationalizing relationships between health and human services providers, offering several recommendations. She also served on the New York State Department of Health’s Social Determinants and Community Based Organizations (CBO) Subcommittee helping to formulate recommendations around the integration of CBOs into Medicaid managed care.
Facts about medical debt:
Every day 1 in 2 Americans choose between paying medical bills and covering basic needs.
Nearly 50% of U.S. adults have delayed or skipped medical care due to the high cost.
50% of U.S. adults wouldn’t be able to afford an unexpected $500 bill.
2/3 of bankruptcies cite medical debt as a leading cause.
Listen
Transcript
Halle: Alison, welcome to the show.
Allison: Thank you so much, much for having me and for that awesome introduction. I really appreciate you.
Halle: I do my homework. I enjoy doing my homework. Maybe you can start by laying the groundwork of the crisis that we're facing with medical debt in the us.
Allison: Yeah, unfortunately, it, it hits so many households. A hundred million people in the United States have medical debt. It's at least 195 billion problem, and that's just the evidence that we have from credit reports. But we know there's lots of medical debt that doesn't hit credit reports and is. Hidden because it could be on credit cards and then that doesn't get captured as medical debt or people borrow money from their friends and family, in which case there is no evidence of it.
And so the problem is really, uh, huge in the United States and it impacts way too many people and is undermining people's financial wellbeing as well as their mental health. Yeah.
Halle: And you guys have relieved more than 8.5 billion in medical debt, which seems like so much, but there's still so much left to go.
Allison: Yeah, I mean, uh, look what we do is huge. It's really helpful and, and significant for the individuals who we help. But I wanna be super clear with everybody all the time that we are not the solution to the problem. We resolve this for individuals and we're helping as many people as we can. We're grateful for everyone that donated to us to help us solve this problem for those people, but we have gotta get it together and do something bigger beyond r i p medical debt at the end of the day to solve this problem.
Halle: I did see though that bankruptcies have been down the last few years. Do you feel like you guys have. Made a little dent in that decrease?
Allison: It's hard to know and to point a, a direct arrow to us. What I, what I do hope we're doing is bringing more attention to this issue. And so I hope that people are, you know, to your point, not seeing this as a personal failing, that they're understanding the system of, of healthcare and, and financing and making better decisions so that they can avoid having to go to the step of bankruptcy.
Uh, whether or not that, you know, you can do point, a direct arrow to our work and the decrease in, in bankruptcies, I, I don't know. But at the end of the day, I do think that we are having an impact on the conversation around medical debt and people's understanding of it, which I think is significant.
Halle: Absolutely. And how has that conversation been affected by the pandemic and the number of people struggling with medical debt since the pandemic?
Allison: Well, we know that, especially initially, a lot of people lost their jobs as a result of the pandemic. Now we've, we've seen a lot of recovery since then, but people, as a result, lost their insurance.
Also people weren't going to the doctors. Uh, not only cuz they didn't have insurance, but because they were scared of, you know, getting covid and frankly ho hospitals and other providers were overrun. Uh, so, so the whole, um, seeking of care was impacted. Uh, but at the same time we also saw a lot more government support of individuals in the form of expansion of Medicaid and, and relaxing of, of who could apply and, and who could get it.
And that's all being taken away. Uh, actually right now, uh, there's some, the, those, the end of the pandemic and the end official end of the public health emergency. Is going to impact how many people are on Medicaid, which we anticipate will reduce how many people have insurance and probably go in the wrong direction in terms of people's access to, to good insurance and therefore the impact on medical debt.
Halle: Who is medical debt most impacting? Is it that those that are uninsured or underinsured? A combination?
Allison: Yeah. I mean, look, 92% of the population now is. Insured, I mean Obamacare or the ACA as it's also known, definitely helped get people on insurance. The problem is that people are underinsured, to your point.
So I would say, say since the majority of Americans do have health insurance. It's actually underinsured who are being hit by medical debt. I think it depends on how you define impacted. If you don't have insurance, the chances are you're, the medical debt you end up with is gonna be a larger amount cause you're gonna be responsible for the full cost of care.
However, if you are underinsured, you're gonna be responsible for that, for that deductible, and you probably don't have it. You know, most Americans are, I think it's like half of Americans don't have $500 in savings to deal with that, and yet many of them have insurance that requires at least a thousand dollars deductible, if not 5,000, $6,000 deductibles.
The other thing I think is really important to point out. Is that like so many other things in this country, it impacts communities of color disproportionately and more so, and that has to do with, you know, systemic and historical racism. And a lot of it is that patients that are of color go to the doctor and aren't believed.
They don't necessarily have the same outcomes when they have to negotiate for their pricing of their care, things like that. So it also disproportionately impacts people of color, and that's something I always like to flag.
Halle: Can you walk us through what exactly happens behind the scenes from the appointment That someone isn't paying for the me the hospital stay, that they can't pay for to the debt collector knocking on their door?
Allison: So it depends on what kind of, whether or not you're underinsured or are underinsured. Um, what happens is usually it takes a while actually for the hospital or other healthcare provider. To figure out how this bill's gonna be paid for. So they'll, you know, send it to your insurance and find out either you don't have insurance or if you, even if you're on Medicaid and maybe elapsed, there could be a negotiation.
There often is between the insurance company and the provider that could take a year, 18 months in that process, depending on the provider and their own policies. You may or may not, you know, get a bill in the mail that says you owe this much. You may call and you might fight it. So it really depends.
There's no standard, uh, approach to debt collection, and it really depends on your response too. What I like to tell people is, If you think that you're getting overcharged, like, don't take the first bill. Don't just get a bill and pay it. Hmm. Do some investigating. Un I hate to say that because I think it's really unfair to put that kind of pressure on individuals, especially when they're, you know, dealing with a health crisis.
We need one more thing on your plate. But I do think it's important that people recognize that there are a lot of loopholes and there's a lot of wiggle room, unfortunately, within the bill collection and what you actually owe. Yeah. Because we have this sort of patchwork of policies that end up making up our, our healthcare financing system.
So, you know, it really does take some time before. You could end up knowing what you actually owe as an individual, and you have financial assistance policies at hospitals that you need to also sign up for. Make sure that you understand them and ask them to either discount what you owe based on your income or give you free care if you really low income.
Halle: One of the procedures that I was shocked at. So I've gone through I V F and you have to pay up upfront. You know, so a lot of people put on their credit cards. And the majority of people go into debt doing IVF. It's, it's really crazy. But because these are privately owned practices, they can say, we're not gonna do this procedure until you pay.
So you pay up upfront. But I was shocked when I tried to negotiate and I was successful at negotiating because I thought these prices were set in stone… and they're not. It is more like going to a car dealer than going to a department store.
Allison: Right. Which is why I go back to that issue of race. Right. I mean, we know if you, there's been so many specials on TV and things like that that show you like, The white person goes into a car dealer dealership and they get a better deal than the black person. Yeah. And the same thing happens in our healthcare system, which is why it's insane that we have a system where you're like, it's like sleeping haing.
And you're like, yeah, exactly. You're haggling for your healthcare. It's hagglinging for your healthcare. That should be like a, a course or something. It's insane.
Halle: It does feel like there is some ickiness in our system, but you don't feel it with necessarily your physician, because they're not in the loop. They don't know what you're paying. It's really these backend operations and the finance teams behind the scenes.
And can you tell me, and you know, kind of how it transfers from a that person to a collections agency?
Allison: Well, so it depends. I mean, honestly, I think at the end of the day, I. Depending on the hospital, they get to de decide whether or not they wanna have their collections in-house, if they wanna outsource it and if they wanna take the step of selling it.
So, but to the patient, it's sort of opaque. Like they don't know whether or not the person knocking on the door and saying, you owe this much money, is the actual hospital, or is an outsourced entity that's saying they represent the hospital. Or if it's actually been sold, and, and you can ask those questions, but who knows to ask those questions and how to verify whether or not that's true.
I mean, there's also like fraud sometimes. I mean, there's, you know, the, the persist situation is sort of a, a real mess in terms of collections and understanding that. Now I will say that, uh, people should again go, going back to this, they should ask deeper questions about their bills. They should ask. You know, do you own this debt?
Uh, but, but really it's, so, it depends. Unfortunately, I can't hate to say it like again, but my answers are, it depends.
Halle: We'll be right back after the break.
So beyond the financial implications of being in medical debt, what are the mental health components of living with the burden of owing money?
Allison: Well, people don't go and get the care that they need. I think that's the number one thing that I would point out is that it's really fundamentally stopping people from going and getting the care that they need when they know that they have a medical debt and or if they're concerned about the ability to pay for a medical care that they need.
We also know that there's research showing that people are three times more likely to struggle with mental issues like anxiety and depression when they have debt. So it really is doing the opposite of what our healthcare system should be doing. Cuz we know that stress undermines people's physical wellbeing, right?
There's a connection between your mental health and your physical health. And if you are stressed out, you're gonna have high blood pressure, you're gonna have hypertension, all these things. Learn lead to, uh, more expensive healthcare needs because you need more interventions. You need to get on medication to deal with your blood pressure, et cetera, et cetera.
So that, that's, that's what we know. We know that it, it has a real implication. People want to pay their bills and they feel like failures when they don't, and then that impacts their mental health.
Halle: What are some of the misconceptions about medical debt that you'd like to see addressed?
Allison: Well, I think people, first of all, have an old view of medical debt that it's always like a hundred thousand dollars and it's, you know, it often the debts are smaller. They're, they're $5,000, they're $2,000, they're deductible amounts these days. I would, I would say that that's one thing that's really, uh, important.
So it's, and it's not, as you pointed out earlier, Not just the uninsured, right? It's the underinsured, the idea that some people have that it's avoidable, right? That you could do, um, something to avoid it. You can, I mean, you certainly can try to get insurance and all of that, but there's so many loopholes and there's so many things that aren't covered.
You're not in the network and you don't have control over all of those things. You could go to a hospital that's in your network and a doctor that's serving that hospital and serves you. Isn't in the, in your network and you could end up with a bill. So it's not the fault of the patient. And I think that that's the number one thing I would get people to understand is that people are victims of medical debt regardless of doing everything right.
We actually know that that's like a fact that people end up with medical debt, that have insurance that did their research, and it's really unavoidable. So anyone could be a victim. Yeah. Yeah.
Halle: Do you have any specific, like success stories or memorable experiences that you've had with individuals or families as they've overcome medical debt through your organization?
Allison: Absolutely. I mean, this is the favorite part, right? I mean, we get, we get, you know, it's like people are so overwhelmed and they're getting these bills in the mail and then boom, this one letter pops up that's like, Hey, Guess what? You don't know anything. You didn't do anything and you don't owe anything.
And that's, that's the best part of my job. So, yeah. Um, a couple of stories that I, I like to tell is, is one about, um, this man in Utah who was a a, a veteran, is a veteran. Uh, he had nerve damage in his leg from his military service. Um, he needed surgery. Uh, he, uh, was not able to have the va um, he had VA coverage, but he still ended up with Watson, lots of medical debt, a result of, of needing this surgery.
And the heartbreaking part is that then when his son, which he was so proud of, was ready to go to college, he couldn't cosign the, the, the loan for his son's student medical debt. Like his son needed loans and he couldn't cosign. And he felt like such a terrible father and a failure. Yeah. Ugh.
Halle: Yeah. Well, I mean, so were you able to meet him and like, what was your interaction?
Allison: actually a, the reason why I like to, we have his story. He actually told, like, did, did a video for us, and if you go to our website, you can hear him tell the story and it's just, he's just like, wow, they took care of that, some of that medical debt, you know, it's like, it's, it's, it's really great.
Um, and then, and then a lot of the people that we help are, you know, our single moms tend to be obviously, like so many things, they're burdened by medical debt. There was this one woman, Terry, That had her, her child prematurely, you know, she was a high school math teacher, you know, again, doing everything right.
Um, but, and she had insurance and she still ended up medical with medical debt and it followed her for years and years. And that, and her story's actually captured in an NPR R piece that we did. So, um, I would also people to look at that. Okay. Yeah. So
Halle: So earlier you had mentioned that RIP medical debt is just a piece of the solution, but there's systemic issues that you'd like to see relieved. You know, what is your role in that? And are you guys moving into more policy advocacy, healthcare affordability, conversations that are an important component to solving this problem?
Allison: Absolutely. I think we have a responsibility as a group that is, It's cleaning up the mess of the broken system to say, Hey, wait a minute, why do I have to do this work? Like, we've gotta fix this, right? Like, I mean, my biggest goal is to get ourselves out of business that we fundamentally fix this problem, right?
Like, I, I, I often say like, I'm, I'm pretty employable. I think, I think I can find another job. Like I'd be happy. More than happy to do that. For us, what we wanna do is make sure that we are lifting up the stories of these individuals as you just helped me do. So that people understand the impact this is having on people, how widespread it is, and that we could do better, uh, by doing that.
I think we're fundamentally making sure that this issue is front and center, that it stays a priority. And that we are putting pressure on the system politicians, uh, to actually make some change and to make this a priority. And I'll say we have seen s some success. We were invited to the White House last year, the White House put out.
Nice. I know. It was great. And then, um, they, the White House put out a statement recently about all the different things that they're thinking about medical debt and the ways in which they're making changes within the, without having to go to Congress, because that's a whole other political fight. Uh, which is, you know, unfortunately this isn't unique to medical debt that.
We are not moving the ball on a lot of, uh, a lot of policy changes, right? But they're doing what they can and all they can do is keep putting that pressure on. So we do have, um, a policy public policy department that we've just started, uh, that about, about a year and change ago. And we are, we're, we're looking at what the ways in which we can support greater change and more systemic change, and also lifting up the voices of those individuals.
And so that's how we see our role in this.
Halle: Yeah. Amazing. And you joined the organization as C E O. Right before the pandemic. Yeah. Can you tell us a little bit about what you did before and what kind of brought you to this organization?
Allison: Sure. Um, yeah, it was a crazy time. It was late January, late January of 2020.
I'm like, I'm gonna take on this new role. And I was like, oh, I'm gonna do it from my living room with my pre-K kid in, um, on my living room. Floor. Floor. Okay. I got this. Oh my gosh. And I did it. You got tricked. Yeah, I did it though. I did it and I'm grateful. Um, before coming to to this role, I was the head of an association of nonprofits providing human services in New York City.
So everything from the homeless shelters, afterschool programs, childcare providers, mental health clinics, et cetera. And what I knew from that work was that we, first of all, we don't spend enough on social services. We spend a lot on healthcare that is very different from other, uh, places. Yeah. Across the co uh, uh, other countries.
Uh, and I think what that means is that we're, that's why we don't have as good of outcomes because we're, we're not preventive. Right. A lot of the, the things that healthcare addresses. Are what's called social determinants of health, right? So they are things like your environment, where you live, your home situation that impact your, your wellbeing and your health.
And we don't spend nearly enough money on those programs. And that's what I was doing, was advocating on the, on their behalf. And when I saw this opportunity at R I P, not only did I understand because I had seen so many different interventions and and nonprofits running that this was different, but that it was needed because of the fact that this was really the issue of medical debt is a clash between a broken healthcare system and a broken.
Uh, economic system, right? Mm-hmm. I mean, the fact that people don't have a thousand dollars is in and of itself a, a problem that has nothing to do with how we finance healthcare. Yeah. So it's those two things together that make up this issue of medical debt, and it really aligned with, uh, the same populations that I was fundamentally serving through these nonprofits, uh, that I supported.
So, um, yeah, so that's why I came to this role and, and, and my background and, and the, the lens I do this work through. Yeah.
Halle: And we, you know, we all face naysayers working in healthcare. You know, you're in the nonprofit sector, so maybe a little less of the naysayers than, uh, for-profits are facing. But can you tell me about some of the biggest roadblocks that you currently face
Allison: in the job?
I. Some of the biggest roadblocks, I guess, are getting, you know, there's so much, so many hospitals out there and we have to get to all of them. Yeah. And get them convinced that this is a good thing to do because we're a new thing. Right? Like, they're like, what? What? You know, everyone's so innovative.
Everyone loves to talk about innovate, innovation in a healthcare space. And so, and there's all these people knocking on, especially revenue cycle folks at hospitals on their doors being like, We have another licia that's gonna help you collect more money from the, and it's patient focused and it's blah, blah, blah, blah, blah.
Uh, and so getting them to say like, no, seriously, we are different is hard. Yeah. Uh, it's really hard to, to break through. But I think we're making really good progress. We've gotten, you know, some very large hospital systems attention and they're working through us and, you know, we only started working directly with hospitals about, Uh, two years ago, a little bit longer.
Okay. And so, you know, we ha we ha don't have a lot under, we have, I don't have a lot of time under our belt belt working directly with hospitals yet they are, when they do pay attention, which they have been doing, they come to the table. And so that I think is, is huge. Yeah. Yeah, well
Halle: it makes sense, right?
Like they, they actually want their patients to not have the burden of the deaths, that they can come back and have the preventive SER services that they need to hopefully prevent more, you know, catastrophic healthcare issues. Exactly. What's next for you guys? You talked a little bit about some of the policy work and going to the White House, like how do you see the organization evolving?
Allison: So we're building capacity, like we really wanna get our hands on a lot more medical debt. One of the things that's been, um, happening, which is pretty incredible and I'm sort of pinching myself all the time, is that government is knocking on our door left and right. So we've really been leaning into those relationships.
For example, cook County was the first, uh, local government to come to us that's in the Chicago area. They gave us ARPA funds, the American Rescue Plan dollars. They, uh, allocated 12 million for us to relieve 1 billion of debt in Cook County. And we've already re relieved, uh, 80 million of debt there and we're got many more hospitals on the horizon.
So we'll be doing more work there. The city of Toledo came right behind them and said, wait a minute. We heard about Cooke County, can we do this too? So we've got work going on there. Yeah. We signed a contract recently with, uh, the city of New Orleans. We've got at least 30 other city, state and county governments that have asked us to engage, and many of them have already passed budgets that include funding for our ip, medical debt's work.
So that I think is what we're really leaning into at this moment.
Halle: Amazing. And how can listeners support your mission?
Allison: They can go to RIPMedicalDebt.org and they can start campaigns. They can make a donation and you can also, if you're associated with a healthcare provider, get them to call us and to talk to us about selling us their debt.
I mean, we did. None of this works amazing if we don't have access to the debt.
Halle: Yes. Yeah. We have a lot of providers that listen, so I'm sure their ears are burning right now and they're excited to connect. Allison, thank you so much for being here, and thank you for all that you do!
Allison: Thank you so much for the opportunity and for lifting up this important issue.