Fergus Falls nonprofit to help forgive medical debt for 3,700 Minnesotans
Beginning Aug. 7, about 3,700 Minnesotans can expect a pink envelope in the mail that says: “Congratulations, your medical debt has been retired and we have notified the credit bureaus that this debt has been extinguished.”
That’s according to Jeff Smedsrud. He’s the managing director of CA Foundation, a Fergus Falls nonprofit that made a donation last week to a national charity that will buy $3.3 million in unpaid medical debt from low-income Minnesotans.
The national charity RIP Medical Debt, based in New York, buys delinquent hospital bills at pennies on the dollar carried by individuals who earn less than four times the federal poverty level. In Minnesota, that’s a total income of less than $78,880 for a household of two people.
The process of buying debt is similar to the way a collection agency buys debt to profit on later.
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The difference is rather than having debt collectors contact patients to try to get them to start paying, the charity sends out a notice to patients that their debt is gone.
“People have a right to know what their debt is being bartered and sold for,” said Smedsrud, who’s also a board member of RIP Medical Debt. “And if they knew they had a $10,000 medical debt that could be wiped off for $200 or $300, they'd pay it. Or their uncle or neighbor, or somebody in their church or social group would.”
Since 2014, RIP Medical Debt has freed over 6 million Americans nationwide of health care debts amounting to more than $9.5 billion.
This is the third donation CA Foundation has made to RIP Medical Debt, which mostly covers debt for necessary medical expenses rather than elective procedures.
“It will improve their credit ratings, make them more likely to re-engage in the health care system, which leads to better outcomes and lower costs in a macroeconomic sense,” said Smedsrud.
According to the Urban Institute, about 2 percent of Minnesotans held medical debt in collections last year, which is the lowest in the country. Nationwide, 13 percent of Americans have medical debt in collection, according to the institute.
Smedsrud’s long term goal is to help Minnesota become the first “medical-debt-free state.”
“Minnesota has an opportunity to become the first state that has absolute sunshine about medical debt and what the value is,” said Smedsrud.