Eye On Illinois: Medical debt eradication effort takes its first $72M off the books

Are you a resident of Illinois? Do you earn less than $60,240 per year? Do you have outstanding medical debt?

If you answered yes, keep an eye on your mailbox.

Last week Gov. JB Pritzker’s office announced more than 52,000 Illinoisans will soon learn they no longer owe a collective $72 million in medical debt. It’s the first round of leveraging $10 million in federal funds to eradicate up to $1 billion through a contract with a nonprofit firm called Undue Medical Debt.

The firm, founded in 2014, said it has helped more than 9.8 million people by erasing more than $14 billion in debt. Through contracts and collecting donations, Undue buys outstanding debt from hospitals, medical offices and collections agencies that have decided they’d rather have the negotiated offer on the table than the right to keep pursuing the total amount.

Once Undue owns the rights, it figures out which people owe what amounts and sends letters telling them the obligation is covered and that their credit reports should reflect the change.

In Illinois, the program applies only to people whose income is at or below 400% of the federal poverty level (aspe.hhs.gov/poverty). For a family of four, that figure is $146,320. Another way to qualify is to have medical debt equal to or greater than 5% of household income. But the most important factor is whether the provider that originated the debt sells or donates its portfolios to Undue.

That’s why part of the effort, beyond an initial capital outlay, involves working with the Illinois Health and Hospital Association to encourage collaboration with Undue.

When Capitol News Illinois reported on the program, it cited earlier efforts such as Cook County using $12 million from a federal COVID relief stimulus package to take a $382 million burden off the shoulders of 213,000 people. The county also recently brokered a deal with Undue and Loyola Medicine to eliminate $112 million in debt for that system’s patients.

These stories only represent good news on two conditions: first, accepting the strategy of leveraging public resources to directly improve individual economic conditions at a rate of $1 spent per $1,000 relieved; and second: not focusing too much on the conditions that put millions of people billions of dollars in debt simply by trying to stay healthy.

The U.S. Census Bureau’s Survey of Income and Program Participation said 15% of American households owed at least $250 in medical bills as of December 2021. The total was at least $220 billion, with about 6% of adults owing more than $1,000 and about 3 million people who owe more than $10,000.

The sustainability of those conditions notwithstanding, it’s easy to understand why politicians are pursuing this strategy.

• Scott T. Holland writes about state government issues for Shaw Local News Network. Follow him on X @sth749. He can be reached at sholland@shawmedia.com.