ST PAUL, Minn. — St. Paul residents drowning in medical debt could soon see some relief.
On Wednesday, the St. Paul City Council passed an $844 million budget for 2024. The plan called for an innovative medical debt relief program, in which the city will invest more than $1 million in American Rescue Plan funds into the nonprofit organization RIP Medical Debt. That investment will, in turn, provide more than $100 million in medical debt relief.
“The truth is, it’s not that creative,” St. Paul Mayor Melvin Carter shared on Thursday, adding, “It’s what private sector companies do all the time. That’s the way debt works. If a company tries to collect on a $100 [medical] bill — and they can’t — then they sell it to some debt collection company for $50. And then they sell it to another one for $25. Debt trades for pennies on the dollar all the time.”
Carter’s office estimates the plan will benefit 45,000 St. Paul residents.
“We know medical debt hits every cross section of our community. We also know the medical debt hits low-income Americans, hits communities of color, particularly hard,” he said. “Our number one strategy for economic development in our city is to make sure that people have dollars in their pocket.”
Carter said he learned about this approach to providing financial relief, while ensuring ongoing access to medical care, by researching what other cities were doing. He specifically talked with Cleveland leaders after they passed a similar measure.
“I’m good friends with the mayor of Cleveland and when they announced their plan to do that this summer, I gave him a call and told him: ‘Hey, tell me about that.’ So, we made sure St. Paul was right behind them."
So far, health systems who stand to collect payment on delinquent accounts have expressed support for the plan, including M Health Fairview, HealthPartners, Allina Health and Children’s. But Carter has also heard from those who questioned whether this was the right way to spend federal pandemic relief funds.
“I heard people say: ‘Is that the right use of these funds? Is that the right role in municipal governance?’ I’ll tell you one thing that my years of public service taught me, is when we recognize a problem, our residents, our constituents are tired of hearing leaders saying, 'Maybe that’s somebody else’s job.' This is pandemic relief, and this is an initiative that is geared around access to health care.”
Under the plan, residents will need to financially qualify for the relief. According to the city, that includes residents with household income between zero percent and up to 400 percent of Federal Poverty Guidelines. Residents also qualify for relief if their medical debt represents five percent or more of their annual household income.
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