Ohio uses ARPA funds to buy medical debt

Nearly a quarter of Americans have medical debt, according to a LendingTree survey fielded earlier in 2022. These medical expenses are often unforeseen, which can be problematic for Americans without established emergency funds, with small credit card limits, or other roadblocks. However, Toledo, Ohio, passed a community-scale medical debt relief initiative in partnership with Lucas County.

According to Fortune, “drawing inspiration from Cook County, Illinois, we partnered with the national charity RIP Medical Debt and devoted $800,000 of Toledo’s ARPA funds (and $800,000 of the matched commitment from Lucas county) to medical debt relief.”

It works simply: RIP Medical Debt purchases debt for pennies on the dollar and then relieves the debt. Our groundbreaking program will wipe out $240 million in medical debt for 41,000 people at only $1.6 million. There are no administrative hurdles for community members to overcome. Instead, relief recipients are sent a letter informing them their debt has been canceled.

Toledo is a struggling city, and the pandemic hit us hard. People lost jobs or had to take low-paying jobs without adequate benefits. While the country is on its way to economic recovery, that recovery has been unequal as people with the highest need received the least assistance.

The Biden administration enacted the American Rescue Plan Act (ARPA) to address those disparities. The plan granted money to local governments like ours and empowered us to enact targeted solutions to our communities’ most serious challenges.

After supporting ARPA funds for priorities like job creation, safe neighborhoods, and youth programs, I sought other strategies to foster a more robust and equitable recovery. Medical debt disproportionately affects lower-income and working-class households with already stretched-thin budgets. Alleviating this burden helps families make ends meet and put food on the table.

A recent national survey conducted by Tulchin Research finds that two-thirds of Americans (67%) would support the Toledo model for adopting medical debt relief in their community, including strong majorities of Democrats, Republicans, and Independents.

While this is an excellent use of ARPA funds, essentially, taxpayers are paying off medical debt that should never have been incurred. Nobody should have to empty their life savings to pay a hospital bill or out-of-pocket expenses for an expensive cancer drug.