Over the past decade, R.I.P. Medical Debt has emerged as a significant player in health care philanthropy, employing a unique strategy to alleviate the burden of medical debt for countless Americans. By purchasing and forgiving old bills that would otherwise be sold to collection agencies, the nonprofit has made substantial strides in addressing the staggering amounts owed to hospitals. Since 2014, R.I.P. Medical Debt claims to have absolved over $11 billion in medical debt, thanks in part to generous contributions from philanthropists and municipal governments, including an $18 million pledge from New York City’s mayor, Eric Adams, earlier this year.
However, a recent study conducted by a group of economists has cast doubt on the efficacy of the high-profile charity’s approach. The study, published on Monday, followed 213,000 individuals in debt and randomly selected some to receive assistance from R.I.P. Medical Debt. Surprisingly, the researchers found that debt relief did not lead to improvements in debtors’ mental health or credit scores, on average. Moreover, those whose bills were paid off were just as likely to delay medical care as those whose debts remained unpaid.
Ray Kluender, an assistant professor at Harvard Business School and co-author of the study, expressed disappointment with the findings, stating, “We don’t want to sugarcoat it.” In contrast, Allison Sesso, R.I.P. Medical Debt’s executive director, cited positive feedback from beneficiaries, noting that the charity had received expressions of gratitude from those it had assisted.
The study’s results contradict previous surveys conducted by R.I.P. Medical Debt, which reported that a significant portion of individuals with medical bills experienced negative impacts on their mental health and delayed seeking medical care as a result of debt. While other forms of debt relief, such as paying off student loans or mortgages, have been shown to have positive effects on mental health and financial well-being, medical debt relief appears to have limited impact due to its lower urgency and the evolving landscape of credit reporting.
Notably, the study revealed that major credit reporting agencies began excluding debts smaller than $500 from credit reports last year, reducing the significance of outstanding medical debt on individuals’ credit scores. Additionally, the federal government is considering rules that would remove medical bills entirely from credit reports, further diminishing the consequences of unpaid medical debt.
The study, published as a National Bureau of Economic Research working paper, marks one of the first comprehensive examinations of the impact of medical debt relief on individuals. Amy Finkelstein, a health economist at the Massachusetts Institute of Technology, emphasized the importance of rigorously evaluating the outcomes of such interventions in light of ongoing policy discussions. Finkelstein, who co-directs J-PAL North America, a nonprofit organization that funds research on social programs, provided support for the study.
The collaboration between economists and R.I.P. Medical Debt was initiated in 2016 after the nonprofit was featured in a segment on John Oliver’s television show. The experiment, which wiped out $169 million in debt from 83,000 debtors between 2018 and 2020, found minimal differences in outcomes between those whose debts were relieved and a control group.
While R.I.P. Medical Debt continues to evolve its approach, focusing on larger-scale debt forgiveness initiatives, the study’s findings underscore the complexity of addressing medical debt and its implications for individuals’ financial and mental well-being. As the debate over the efficacy of medical debt relief continues, further research and innovation will be essential in shaping effective solutions to alleviate the burden of medical expenses for millions of Americans.
