Thirty-six percent of Californians have medical debt, owed to a doctor’s office, a hospital, a collections agency or a credit card company. That financial burden can lead people to delay or forgo necessary medical care.
Los Angeles County just took a step to change that.
The county, by far the most populous in the nation with nearly 10 million people, plans to start buying up and forgiving the medical debt of some of its poorest residents. The county board of supervisors voted this week to spend $5 million to partner with Undue Medical Debt, a national nonprofit. The program is expected to start later this year.
“No one should be driven into poverty because they got sick,” Janice Hahn, a member of the board of supervisors, said in a statement, adding that she believed L.A. County had a “moral obligation” to help debt-stricken families.
The county joins a growing list of places with similar forgiveness programs, including the state of Arizona, New York City, New Orleans and Washington, D.C.
L.A. County residents owed a total of $2.9 billion in medical debts in 2022, the most recent year for which data was available.
Typically, hospitals with unpaid patient bills sell the debt at a discount to collection agencies, which try to recoup the money for profit. By contrast, when Undue Medical Debt buys unpaid bills, it cancels the debt entirely.
The nonprofit says it can erase an average of $100 in face value of debt for every dollar that is donated to the group. L.A. County officials say the $5 million invested by the county could allow the group to eliminate $500 million in residents’ medical debts and help 150,000 Angelenos completely erase what they owe. (Approximately 800,000 county residents have medical debt.)
There isn’t much research evaluating how relieving medical debt affects individuals. One of the first studies on the topic, published in April as a working paper by the National Bureau of Economic Research, found that medical debt relief didn’t improve the mental health or credit scores of debtors, on average, my colleague Sarah Kliff wrote.
That could be because the people getting the relief also have so many other unpaid bills that erasing one doesn’t make a significant difference. Or it could be because the major credit reporting agencies removed unpaid medical debts smaller than $500 from credit reports last year, so relief of those debts would have little impact. (The Biden administration has proposed rules that would remove medical bills entirely from credit reports.)
When the study was published, the executive director of Undue Medical Debt, Allison Sesso, said the research contradicted what the nonprofit had heard directly from people it had helped. And she said that the organization’s approach had changed since the study’s experiment ended in 2020. It has started buying debt directly from hospitals, rather than from collections agencies, she said, so that the debts will be erased sooner, before they have a prolonged negative impact.
L.A. County officials said the partnership with the nonprofit was part of a larger strategy to address medical debt. They said they planned to work with health insurance companies and hospitals to understand how they charge patients and calculate debt. And they plan to offer expanded legal aid services to residents and make it easier for people to apply for financial assistance through the county.
“We don’t want to be coming back to you in five years, trying to pay off medical debt again,” L.A. County’s public health director, Barbara Ferrer, said at the board of supervisors’ meeting this week. “We want to pay it off and then we want to move forward — without people who don’t have economic means continuing to accrue this level of debt.”
And before you go, some good news
JD Flannel Donuts and Coffee in San Juan Capistrano may seem inconspicuous, but it was just named California’s best doughnut shop by Yelp, SFGate reports. Offering monthly flavors on the menu, JD Flannel has a unique selection ranging from vanilla cake doughnuts to Mexican chocolate churro.
The shop was also deemed the third-best doughnut shop in all of America and Canada by Yelp last year.
Thanks for reading. I’ll be back on Monday. Enjoy your weekend. — Soumya
P.S. Here’s today’s Mini Crossword.
Halina Bennet and Briana Scalia contributed to California Today. You can reach the team at CAtoday@nytimes.com.
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