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A charity that abolishes medical debt

RIP Medical Debt: Abolishing crippling health care debts
RIP Medical Debt: Abolishing crippling health care debts 04:19

In October 2021, Natasha Pempsell, a pre-school teacher and mother of four living in Covington, Georgia, received her letter: "RIP Medical Debt? That sounds like a scam!"

It sounded too good to be true: the $1,500 medical debt for her son Michael's emergency room visit, from way back in 2011, was suddenly erased.

This was no scam. "It said 'abolished.' Okay, I know what that means!" said Pempsell. "And then I just kept picking up the letter and reading it, over and over again. Like, this is amazing!"

How amazing? Since 2014, RIP Medical Debt has abolished more than $8.5 billion worth of medical bills for 5.4 million Americans. 

How it came to exist is the story of a massive change of heart that began in, of all places, New York City's Zuccotti Park during the Occupy Wall Street protests of 2011. "I have never experienced so much energy in my life," recalled Jerry Ashton. He and a friend, both executives in the debt collection business, dropped in on the protesters. The experience upended their lives.

Ashton said, "When they discovered that there were bill collectors in Occupy Wall Street, they came to me and Craig Antico and said, 'Could you help us go to the debt market and buy that debt, so that we can forgive it and publicize it?"

In 2014, Ashton and Antico turned the concept into RIP Medical Debt, a charity that buys up delinquent medical debt at pennies on the dollar, just as debt collectors do – meaning even small donations to the charity have a big impact.

"We take $1 and turn it into at least $100 of medical debt relief by acting like a for-profit debt buyer," said Allison Sesso, president and CEO of RIP Medical Debt. "Once we get our hands on those debts, we identify people that are 400% of poverty [or below], or if their debt is 5% or more of someone's income."

As it happens, Natasha Pempsell's $1,500 debt is just about the average amount that RIP Medical Debt relieves. Sesso said, "You'd be surprised; it's not large amounts of money oftentimes that people are struggling under. Sometimes the debts we relieve are $500, $1,000, $2,000."

According to Dr. Steffie Woolhandler, a professor of public health at New York's Hunter College who has studied medical debt, one in every five U.S. households does have some medical debt.

Teichner asked her, "How big a factor is medical debt in bankruptcies in this country?"

"Medical illness and medical bills contribute to the majority of all U.S. bankruptcies," Woolhandler replied.

And just how much medical debt is out there?  Between $80 and $120 billion, compared to the $8.5 billion of medical debt that RIP has abolished.

Ashton said, "RIP is not the solution. RIP is a charity that sweeps up after the parade. The health care system is producing more people with unpayable debt than we can even handle."

Natasha Pempsell said, "It is disheartening when you work and you contribute to society and you pay your taxes and you're a law-abiding citizen, and then if something happens to you or your children, it's earth-shattering."

For Pempsell, though, what RIP Medical Debt has been able to achieve is a kind of miracle: "It makes anyone who is doubting, 'Is there any good in the world still?' It gives you hope that there is good somewhere."

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Story produced by Alan Golds. Editor: Ed Givnish.

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