Thomas Andre Fure/shutterstock

Thomas Andre Fure/shutterstock

The debt buying industry has often been lambasted for predatory behavior, but RIP Medical Debt, a nonprofit that buys and forgives medical debt for eligible recipients, presents a striking exception. In July, over 10,000 people in rural areas of Central Appalachia received word that they would have their medical debts swept away with the help of the groundbreaking organization and two private donors’ families. With a recent explosion of game-changing debt forgiveness initiatives like this one, RIP serves as a high-impact example of how nonprofits can partner with grassroots, community-led philanthropic efforts to leverage donor dollars with a measurable ROI.

Journalist and author Bill Bishop and Julie Ardery (the founding editors of The Daily Yonder) and Jim and Sharon Branscome (former employees of the Appalachian Regional Commission)—all of whom have longstanding ties to Central Appalachia—made a $100,000 donation to RIP Medical Debt in May 2019. By buying the collection of debts on the secondary market at a hefty discount, the nonprofit parlayed that $100,000 into a grand total of $10 million in medical debt forgiveness across 70 counties in primarily rural areas of Kentucky, West Virginia, and Virginia.

A Sky High ROI

This isn’t the first time RIP Medical Debt has made headlines for large-scale debt forgiveness with the help of donations (and even microdonations) from individuals, private organizations, and corporations. In particular, RIP has drawn attention to how funders could potentially use the beleaguered state of the medical debt market—in which debt packages are often sold by debt sellers, doctors, and hospitals at steep price cuts due to widespread lack of payment—to their advantage, forgiving up to $100 of medical debt in one fell swoop with as little as $1 from a private donor or smaller organization.

The nonprofit, founded in 2014, first made waves when comedian John Oliver worked alongside the organization to clear $15 million of medical debt on HBO’s “Last Week Tonight” in 2016 with a donation of just $60,000. Since then, local advocates, anonymous donors, and even a number of congregations of Christian churches in communities in need have partnered with the nonprofit to forgive over $700 million in medical debt.

In Wichita, Kansas, for example, members of the 3,800-member congregation of Pathway Church cleared $2.2 million in medical debt for 1,600 Kansans with a $22,000 donation and the help of RIP Medical Debt in May 2019. Meanwhile, in central Arkansas in late August, the congregation of Russelville’s City Church used a $26,000 donation in partnership with the nonprofit to abolish over $3 million in medical debt for 1,589 community members. And Put People First! PA (PPF), a human rights organizations, recently partnered with the nonprofit to clear medical debt for 875 Western Pennsylvanians.

To achieve the highest-possible ROI, RIP focuses its efforts on the individuals and regions where medical debt forgiveness could make the biggest and most immediate impact. Although medical debt is a leading cause of bankruptcy throughout the U.S., the problem is especially severe in Appalachia and other rural areas. The region is beset by widespread poverty and both out-of-pocket healthcare costs and insurance coverage denials are higher than the national averages. RIP strategically selects partnerships with community-led organizations in these regions so as to reap the most impactful return possible.

Why Medical Debt Forgiveness Matters

Medical debt forgiveness, suggest RIP Medical Debt’s co-founders, is crucial to improving both public health and the financial well-being of low-income families and individuals. Around 20 percent of Americans are currently weighed down by medical debt, and illness and hefty medical bills contribute to nearly 67 percent of American bankruptcies—equivalent to around 530,000 families per year who file for bankruptcy, according to a recent study in the American Journal of Public Health.

Despite the severity of the medical debt problem, RIP Medical Debt co-founders Jerry Ashton, Director of Education and Outreach, and Craig Antico, Director of Debt Operations—who have a combined 70-plus years in the credit and collections and debt buying industries—believe that their nonprofit could present a viable path forward in the world of medical debt forgiveness. As former collections agency executives, they know exactly how the debt buying market works. They use that know-how to buy and wholly forgive debts on the secondary market.

Initially inspired by a campaign during Occupy Wall Street to buy and forgive millions of dollars in medical debt and student loans with just $50,000 in donations, Ashton and Antico realized that they could leverage their expertise in the credit and collections industry to help populations in dire need. They buy medical collections accounts for primarily low-income individuals and families on the open market at a low cost, then forgive the debts in full.

What’s more, RIP Medical Debt pairs with seasoned healthcare administrators who know the ins and outs of American healthcare to ensure that they’re targeting high-need areas. Because most U.S. medical debts don’t ever get paid, medical providers will often sell them at ultra-low prices. The discounts allow individual donors and private organizations to abolish millions in medical debt for “pennies on the dollar.”

Who Qualifies for Debt Forgiveness With RIP Medical Debt?

Eligible recipients of RIP Medical Debt forgiveness have debts that outweigh their assets and earn less than twice the federal poverty level. Additionally, their debts must represent over five percent of their annual income.

Antico and Ashton select debt bundles based on data analysis that hones in on the recipients who need the most help. Perhaps most importantly—and unlike in many other philanthropic models—RIP debt forgiveness recipients have no tax impact, no adverse consequences, and no strings attached. Their debts are simply cleared, no questions asked.

RIP Medical Debt’s ultimate goal is lofty: to abolish $1 billion in medical debt by 2020. But after that, the founders suggest, there will still be more work to be done. The nonprofit has already cleared debts for nearly 250,000 Americans, and its stated mission is to keep going until all Americans in need are free of the burden of medical debt. This model, Ashton suggests, could also work in other contexts to eradicate similarly burdensome debt loads, such as student loans for low-income students.

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