St. Paul Mayor Melvin Carter pitches wiping away $110M in medical debt for residents
ST. PAUL, Minn. -- St. Paul Mayor Melvin Carter wants to wipe away millions in medical debt for residents with low and moderate incomes.
His proposal, announced in his 2024 budget address Thursday, would invest $1 million from the city's share of federal COVID relief funds into RIP Medical Debt, a national nonprofit that purchases outstanding medical debt for pennies on the dollar by buying large amounts at one time at a discount.
"That's what the value is on a commercial sense because these debts are not very collectible because most people can't actually pay their debts," said Ruth Lande, vice president of hospital relations with the organization. "Most Americans don't have $500 sitting around to pay a bill."
Allina Health, Children's Minnesota, Fairview Health Services, Health Partners are part of the partnership, dubbed the "Medical Debt Reset Initiative." With their agreement, RIP Medical Debt can relieve an estimated 45,000 city residents of $110 million in medical debt. The group has already forgiven close to $10 billion of it nationwide.
To qualify, individuals and families would need to make less than 400% of the federal poverty guidelines, which is $120,000 for a family of four, or have debts that are 5% or more of their annual income.
Most unpaid bills are around the $1,000 mark, Lande explained.
"This program is not just about wiping away debts," Carter said in his address. "It is about giving people a chance to breathe, to rebuild, and to reclaim their lives without the weight of medical bills crushing their aspirations."
This isn't the first time RIP Medical Debt has forged a partnership with local government: Cook County, the most populous county in Illinois that includes Chicago and cities like New Orleans have taken similar steps.
The St. Paul City Council will still need to sign off on this plan and other parts of the mayor's budget proposal by the end of the year before the plan takes effect, so it likely wouldn't be until next year that residents saw the relief.
Lande said RIP Medical Debt doesn't allow anyone to apply to get assistance—it's only possible with providers or debt collection agencies signing on to participate.
Because the four health systems in St. Paul have agreed to be a part of it, RIP Medical Debt can also wipe away the debts of other Minnesotans, not just those living in the capital city through other donations.
"Sometimes people say it's too good to be true. But it is true," she said. "This is not the complete solution. But it's really important for the people who have debt now."