Troy Peck of Cranston, whose 4-year-old daughter is in remission after a two-and-a-half-year battle with a rare form of leukemia, speaks at a State House press conference on Tuesday, Oct. 29, 2024. (Nancy Lavin/Rhode Island Current)
Troy Peck’s eyes welled as he recounted his daughter Aspen’s two-and-a-half-year battle with a rare form of leukemia.
After months in the hospital, dozens of surgeries and an investigational drug, Aspen, now 4, is in remission. Another relief for the Cranston family: a Medicaid waiver which helped cover the staggering cost of Aspen’s care — upwards of $1 million, according to Peck..
“Not all Rhode Islanders are as fortunate,” Peck said at a State House press conference on Tuesday morning. “Many will have to incur crushing medical debt as they fight to stay alive.”
That’s where a new program steps in. The Rhode Island Medical Debt Relief program, run via the Rhode Island Office of the General Treasurer, aims to help income-eligible state residents escape the cycle of medical debt by buying and forgiving their outstanding medical bills.
Medical debt is the leading cause of bankruptcies in the United States, affecting more than 5% of Rhode Islanders, according to the Kaiser Family Foundation. The cycle of debt has implications beyond the financial, leading to adverse physical health outcomes and reluctance to seek future care, along with emotional and mental consequences, studies have shown.
“It impacts far too many people, especially the most vulnerable in our community,” Sen. Mark McKenney, a Warwick Democrat, said during the press conference. “No one in the state should get trapped in the spiral of debt and stress that debt brings simply because they get sick or their child gets sick.”
At its core, the program works based on the principle of bulk-buying power to purchase debt from providers and collection agencies at a steep discount, spending “pennies on the dollar” to relieve what would otherwise be costly bills for health care patients.
Rhode Island is among more than 20 city, county and state governments, including Connecticut, with medical debt forgiveness programs. The growing trend reflects the significance of the problem, as well as the availability of federal funding.
In Rhode Island, lawmakers carved out $1 million of the state’s $1.1 billion in federal pandemic aid to fund the new debt forgiveness program, enacted under the fiscal 2025 spending plan. Roughly one-third of the funding ($371,000) will cover administrative and personnel expenses of nonprofit partner Undue Medical Debt.
In the last decade, Undue has bought and helped forgive an estimated $15 billion in medical debt for 9 million people using money from donors. Since 2022, it has partnered with local and state governments on similar debt relief programs, including Washington D.C. and Arizona, according to its website.
As Rhode Island’s program administrator, Undue will buy the debt then work with the Rhode Island treasurer’s office to identify and automatically forgive debt of eligible residents.
Eva Stahl, vice president of public policy and program management for Undue, stressed that the program was a tool, but not the only solution, to making health care more affordable and accessible.
“The goal with programs like this is to give a helping hand, and to invite people back into the health care system,” Stahl said.
Preliminary estimates indicate the program will help 30,000 state residents pay off $85 million of medical debt, according to Robert Craven, policy director for the treasurer’s office.
Sen. Mark McKenney, left, a Warwick Democrat, confers with House Speaker K. Joseph Shekarchi, also a Warwick Democrat, at a State House press conference on Tuesday, Oct. 29, 2024. (Nancy Lavin/Rhode Island Current)
While it lasts
There’s no cap on how much debt can be forgiven, though it must be at least $600 and equal to 5% of a resident’s annual income to qualify. Alternatively, low-income residents who earn less than 400% of the federal poverty level — $60,240 for one-person, or $124,800 for a family of four — can have any amount of outstanding medical bills paid off and forgiven.
The program lasts until the money runs out. And with no more federal pandemic aid left, the future of the debt relief program remains uncertain, especially amid new state budget estimates projecting a $400 million structural deficit in the upcoming budget year.
“This is going to be a challenging year coming up,” House Speaker K. Joseph Shekarchi said. “I’m glad we made prioritization of this bill into last year’s budget.”
McKenney acknowledged the possibility that the program could end once funding runs dry.
But, “I hope that’s not the case,” he said. “This is too important.”
Program beneficiaries will be notified by mail if and when their debt has been forgiven. Only the debt from costs deemed “medically necessary” by health care providers, and at least one year overdue, is eligible to be forgiven.
More information on the state medical debt forgiveness program is available on the state treasurer’s office website.
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