Toledo Ohio is wiping out up to $240 million in medical debt for city and county residents by buying it back for a fraction of the cost

Some lucky Ohio residents might get good news about their medical debt.

On Wednesday, Toledo’s council approved a $800,000 proposal to pay off its residents’ medical debt. The measure was approved after the city was joined by commissioners from Lucas County, which includes Toledo, who said the county would contribute $800,000 to the debt relief effort. That brings the total to $1.6 million, which is expected to clear up to $240 million in medical debt for residents, Toledo City Councilor Michele Grim said wealth.

“Medical debt can happen to anyone,” said Grim, who spearheaded the measure. “It is the leading cause of bankruptcy and research has found it affects home and food security and worsens health outcomes. Our initiative will help some of our most vulnerable residents, as well as working-class and middle-class families.”

Toledo is using $800,000 they receive from the American Rescue Plan Act, President Joe Biden’s economic plan aimed at providing emergency funding and assistance to those recovering from the pandemic, to pay off its residents’ debts through RIP Medical Debt is a New York-based non-profit group that specializes in just this type of acquisition.

Purchasing medical debt at a discounted rate and then canceling a person’s debt has grown in importance in recent years. Debt is often sold for pennies on the dollar because a person cannot pay it. About 41% of US adults have medical or dental debt, according to the Kaiser Family Foundation, a health care nonprofit, in a July report this year. Various organizations have looked into purchasing and canceling medical debt, but the method is less commonly seen by a city or state government.

Cook County, Illinois, which includes Chicago, has also partnered with RIP Medical Debt, using $12 million in federal funds to help the nonprofit purchase over $1 billion in medical debt for county residents negotiate and cancel.

“Because of our model and the way medical debt is bought and sold in the United States, we are able to leverage government funds even further,” said Allison Sesso, CEO and President of RIP Medical Debt wealth. “One dollar into the program eliminates an average of $100 in medical debt.”

“Toledo is the first city to approve a community-level medical debt relief initiative in partnership with national charity RIP Medical Debt,” Grim said wealth.

But Ohio’s statewide debt relief isn’t complete yet, and residents’ medical debt won’t go away overnight.

Going forward, Grim said that once Toledo and Lucas County officially enter into an agreement with RIP Medical Debt, they will use the funds to purchase debt from local healthcare providers. And once the debt is purchased, letters will be sent to those who qualify, advising them that their debt has been forgiven. She did not further clarify which residents qualify.

“Washington may not have a plan for medical debt relief, but Toledo, Ohio does. I hope our efforts become a model for other communities across the country,” Grim said.

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