The city of St. Paul has announced that it will eliminate $100 million in unpaid medical debt for its residents, and those being offered relief will soon receive notices, as they don’t have to apply.
“It won’t be a surprise to them that they owe that debt. It’ll be a surprise to them that they don’t owe it anymore,” Mayor Melvin Carter said at a Tuesday news conference.
There are more than 32,000 St. Paul residents set to receive letters for the first round of city-backed relief. Those who receive letters shouldn’t worry about it being a scam and don’t have to do anything to accept it.
The action from St. Paul was built into its 2024 budget as it looks to invest the more than $1 million it still had in COVID relief funds into the nonprofit Undue Medical Debt. In turn, the investment is seeing $100 million in unpaid debt eliminated, KARE11 reported last year.
Healthcare-related debt is a major issue in America, with the CommonWealth Fund reporting that nearly half of all bankruptcies are linked to medical issues.
A report from Axios in 2022 highlighted the significance of rising healthcare costs and how medical debt increases risks of eviction, food insecurity, and poor health outcomes, regardless of income level.
So, how is St. Paul making this work?
Undue Medical Debt negotiates with hospital systems to purchase eligible debt in batches at a steep discount. After buying the debt, it forgives the bills, relieving consumers of their responsibility to pay.
The program through St. Paul will cover individuals who make around $54,000 or families of four that earn $111,000. Those whose medical debt equates to 5% or more of their annual household income will also be included.
It’s also important to note that the funds are only being used to cover residents’ unpaid bills at health systems within the city.
Carter shared on Tuesday that the forgiveness is being used as a “reset” for those who have struggled post-pandemic.
Tuesday’s round of forgiveness covered $40 million in debt owed to M Health Fairview.