In October, the Lexington Fayette Urban County Council unanimously approved funding for medical debt relief. So, what exactly is medical debt relief and why is it important? Medical debt accounts for nearly 60% of all debt carried by Americans, and Kentucky, being one of the poorest and sickest states in the country, bears more than its share of this burden. Our residents with outstanding medical debt have less financial freedom, worse credit scores, and often don’t seek much-needed medical care.
Lexington Vice Mayor Dan Wu
With all this in mind, I began conversations last year with Undue Medical Debt, a national nonprofit dedicated to using donor funds to buy and abolish uncollected medical debt. They’ve been doing this impactful work for 10 years, but only started working with local and state governments in the last couple of years. The best part of this work? You can buy uncollected medical debt for 100 to 1 on your money. That means the $1 million approved by the council will potentially buy and abolish $100 million of Fayette County residents’ medical debt. Talk about return on investment!
Last September, I put this item in the Budget Finance and Economic Development (BFED) Committee. And in June, my office organized an information session where we were joined by dozens of city staff, health providers, community leaders and advocates who provided vital input and asked great questions about the process. In August, Undue Medical Debt made a presentation to the BFED Committee to give my colleagues more information.
So, what’s the next step? We will soon begin our partnership with Undue Medical Debt, and they will negotiate with our major medical providers to purchase uncollected debt. Patients with incomes at or below 400% of the Federal Poverty Level (approximately $15,000 for one person) or those whose medical debt is 5% or more of their annual income can qualify, no applications needed. Because we are using local funds, only Fayette County residents will qualify.
We also realize that medical debt relief by itself is not a panacea. It does not address the underlying issues of socioeconomic disparity, education, or the structure of our for-profit health insurance systems. That’s why we are not only abolishing burdensome medical debt for tens of thousands of our neighbors, but we are also connecting folks with resources, including financial literacy education, access to free and reduced health care, and help signing up for Medicaid and Medicare. Together we can help break the cycle of negative health and economic outcomes for our most vulnerable Lexingtonians.