Charities That Curb Medical Debt for the Needy Are Growing Fast — and Innovating

Nikiesha Barnett had knee surgery in 2006 and took unpaid leave from her job as a Georgia hospital coordinator while she was recovering. Her health insurance didn’t cover the full cost of the surgery. When Barnett wasn’t able to keep up with the payments for the surgery, she ended up owing about $4,500.

That debt lingered for almost 14 years until one day in 2020, she received a letter from a nonprofit telling her the debt had been relieved. RIP Medical Debt, a national nonprofit, had bought her debt and forgiven it.

Barnett says the wiping out of the debt helps ensure she can now get the care she needs to stay healthy.

When she was in debt, she felt too guilty about what she owed to go to the doctor. Now that concern has been swept away.

Barnett is one of the millions of Americans who’ve had medical debt paid by nonprofits that receive increased support from a wide variety of grant makers and donors, including MacKenzie Scott. Scott gave RIP Medical Debt $30 million in November after awarding the organization $50 million in 2020.

That support has fueled RIP Medical Debt’s far-reaching debt relief. The nonprofit has cleared more than $7 billion of debt since it was founded in 2014, thereby helping more than 4 million families. Last year alone, the group paid off $2.8 billion in debt.

As nonprofits have expanded their efforts, they’re taking a dual approach — paying off debt and pushing for legislative change to prevent or alleviate that debt, such as by expanding Medicaid eligibility.

More than half of adults in the United States have gone into debt because of medical or dental bills in the past five years, according to an analysis by the Kaiser Family Foundation. Black and Hispanic adults are disproportionately burdened by medical debt. States in the South also see higher rates of medical debt because that region was less likely to use federal dollars to expand Medicaid, the government health-insurance program for low-income people. That means low-income residents are more likely to be uninsured.

RIP Medical Debt has gained support from other sources beyond Scott. Individual donors, corporations, and grant makers provided $17.3 million last year, about 8 percent more than its previous best fundraising year.

Dollar For, a national nonprofit that helps patients get financial assistance from hospitals, increased its budget from $350,000 last year to more than $1 million this year. One big grant came from Draper Richards Kaplan Foundation, which is giving the nonprofit $300,000 total over three years.

Beyond national groups, nonprofits that help with medical debt at the local and state levels also have received a boost in giving. The Robert Wood Johnson Foundation gave $2.4 million to Community Catalyst, a health-policy nonprofit that gives aid to small groups that work with hospitals on their financial policies and advocate for new policies. After receiving an initial grant in 2020, Community Catalyst gave $650,000 to nonprofits.

Also, the Annie E. Casey Foundation has made grants to groups addressing medical debt such as the Tennessee Justice Center over the past five years. It contributed about $1.7 million to organizations dealing with debt in 2019. At least $356,200 of that was directed to medical debt.

More foundations and people are giving for various reasons. Jared Walker, founder of Dollar For, says the Covid-19 pandemic helped more people become aware of the urgency of the issue and inspired donors to give more.

Allison Sesso, executive director of RIP Medical Debt, adds that some of the increase in funding is because donors want to see immediate help for those with debt.

“There’s a lot of frustration with our elected officials in terms of them moving and solving issues, and we give an opportunity for people to have relief right now,” Sesso says.

Even so, the nonprofit also continues to look for legislative solutions that will offer long-term help.

Expanded Relief and Advocacy

Two former debt-collection executives, Jerry Ashton and Craig Antico, founded RIP Medical Debt in 2014, inspired by the Occupy Wall Street movement’s work to abolish people’s debt. Their experience in collections shaped the nonprofit’s approach, which mirrors that of for-profit debt collectors. The organization buys the medical debt of low-income people in bulk from hospitals and debt collectors at a reduced cost. On average, the organization uses a $1 donation to relieve $100 in debt.

Its work began to receive more national attention in 2016, when television host John Oliver of Last Week Tonight worked with the nonprofit to abolish $15 million of medical debt. It has consistently grown since, receiving its greatest boost with Scott’s gifts.

Courtesy of Grand Rapids First Church

RIP Medical Debt used the initial grant from Scott to bolster cybersecurity to protect the health and financial data it collects and improve software that combs through hospital data to identify groups of people eligible for debt relief. It has also used the funding to pay local organizations to help RIP Medical Debt connect with new hospitals to build partnerships and purchase their debt.

There are limitations to RIP Medical Debt’s primary approach, as it helps people after they have gone into debt. The nonprofit has increasingly backed efforts to change policy as well, hiring a vice president of public policy in January. It recently supported a ballot proposal in Arizona to limit interest rates charged for medical debt and actions against debtors, which voters approved in November.

But Sesso says the systemic solutions that would prevent debt aren’t coming soon enough to eliminate the nonprofit’s debt-relief work.

“All the other solutions are not things that people agree on and that are gonna happen tomorrow,” she says. “They’re gonna take time, they’re gonna take political will. And until that happens, my work is absolutely critical.”

Meanwhile, Dollar For, which started in 2012, has relieved more than $20 million of debt. It does so by helping people access charity care, which nonprofit hospitals are required to provide to low-income patients. In some cases, charity care pays all of a patient’s expenses; in others, it covers a portion. Many eligible patients aren’t aware they can access charity care, and nonprofit hospitals have been criticized for seeking payments from low-income people who qualify for financial assistance.

Walker started the nonprofit after seeing his own relatives’ concerns about medical expenses. The nonprofit initially raised money through crowdfunding to pay off people’s medical bills. It pivoted to helping people access charity care because it had a greater impact in relieving people’s debt.

An increase in individual donors and grants since 2021 brought the nonprofit’s budget to more than $1 million in 2022. That increase allowed Walker, the organization’s sole employee, to bring on six additional staff members.

Dollar For’s boost in funding came after a 2021 TikTok video made by Walker explaining how patients can access charity care went viral. The video was viewed millions of times and resulted in a flood of requests for help, as well as media attention.

For the Draper Richards Kaplan Foundation, Dollar For has a promising approach to give immediate help to people facing medical debt. While debt forgiveness and advocacy are important, the foundation’s CEO Jim Bildner and managing director Oliver Rothschild say that those approaches have drawbacks. The former comes after people have suffered from medical debt, and the latter can take years to result in change.

“The organizations we see making the greatest difference in the lives of others are those that have identified existing legislation that should be helping folks in real time, and in this case, with their medical debt,” Bildner says.

While groups combating medical debt have seen an influx of funding, most national philanthropies haven’t put an emphasis on the issue , says June Glover, a senior program officer at the Robert Wood Johnson Foundation. Instead, most have focused on preventive solutions, such as expanding health coverage.

“This issue of medical debt will start to come to the forefront again as more states broaden coverage and more Americans are covered, because that’s like the upstream intervention,” she says.

Reid Hoffman, co-founder of LinkedIn, and billionaire Anthony Wood, founder and CEO of Roku, are among other donors supporting Dollar For.

Why Medical Debt Is So Devastating

In addition, across the South, the Annie E. Casey Foundation leads the Southern Partnership to Reduce Debt initiative, which funds organizations that reduce different types of debt. One of its grantees, the Tennessee Justice Center, helped eliminate $420,488 in medical debt for eight people in 2021. The center also trains health care providers and other nonprofits as they work to increase the number of people enrolled in Medicaid.

“The problem is, unlike other forms of debt, the next time I get sick, [medical debt] just repeats itself,” says Rob Watkins, chief operating officer at the Tennessee Justice Center. For instance, student-loan debt is typically accrued once, while people with chronic conditions are likely to require recurring medical care. That is why getting people health care coverage is key, says Watkins.

Other local nonprofits are helping reduce the consequences of medical debt by pressing for policy changes. In New Mexico, the Center on Law and Poverty, a Community Catalyst grantee, helped lead a coalition that successfully advocated for state legislation to protect low-income patients with medical debt from being sent to court or collections.

Economic Action Maryland, formerly known as the Maryland Consumer Rights Coalition, also advocated for several new state laws in the past two years, including ones that expanded hospital charity care and required hospitals to repay patients wrongfully sued for debt collection.

The Maryland nonprofit is also raising money to replenish its Medical Debt Freedom Fund, which pays off up to $1,000 in medical debt for people in the state. Since 2020, the fund has distributed about $15,000.

But even if it raises more to distribute, that won’t help enough people, says Marceline White, the nonprofit’s executive director. “But,” she says, “if you pass laws, you’re able to help hundreds of thousands of people across the state.”

Reporting for this article was underwritten by a Lilly Endowment grant to enhance public understanding of philanthropy. The Chronicle is solely responsible for the content. See more about the Chronicle, the grant, how our foundation-supported journalism works, and our gift-acceptance policy.