Treasurer Diossa Announces Medical Debt Relief Program for Rhode Islanders

Published on Tuesday, October 29, 2024

Providence, RI – Today, Rhode Island General Treasurer James A. Diossa announced a partnership with Undue Medical Debt, a national 501(c)(3) charity that purchases medical debt from health-care providers like hospitals and physicians’ groups and from the secondary debt market like debt collectors, aimed at helping Rhode Islanders eliminate medical debt. During the 2024 legislative session, the General Assembly passed legislation creating a medical debt relief program, to be administered by the Office of the General Treasurer, and funded it with $1,000,000 for the “purchase, cancellation and forgiveness of medical debt.”

Medical debt is the leading cause of bankruptcies in the United States, and it impacts more than 2 in 5 American adults. According to a 2024 study by the Peterson Center on Healthcare and PFF, an average of 5.2% of adults in Rhode Island report having medical debt in a given year. For people and families with limited assets, even a relatively small unexpected medical expense can be unaffordable. High deductibles can contribute to insured individuals receiving medical bills that they are unable to pay.

“I have heard from folks across the state who are struggling with medical debt. The financial constraints brought on by unaffordable medical bills drive people to defer needed medical care, leading to a cycle of debt, distress, and unresolved, potentially escalating health issues,” said General Treasurer James Diossa. “This new program is a critical resource to protect Rhode Islanders’ finances, dignity, and health.” “I also want to recognize my team and Undue Medical Debt for their collective efforts in standing up this program just months after it was passed as part of the budget bill in mid-June,” Diossa continued. “My goal was to implement a fast, efficient and easy process that would provide well-needed relief as soon as possible.”

Rhode Island joins nearly 20 states, counties, and municipalities across the US currently providing some form of medical debt relief. 

The medical debt relief program was passed as part of the state budget, and central to the Rhode Island Senate’s 2024 HEALTH Initiative, a 25-bill package aimed at improving health care access and affordability. “Health care absolutely must be affordable for all Rhode Islanders, and the medical debt relief program will make a meaningful, positive difference for people across our state,” said Senate President Dominick J. Ruggerio (D-Dist. 4, North Providence, Providence). “I am proud that the Senate has been a leader on this serious issue, and I want to thank Senator McKenney, Treasurer Diossa, and the many partners and stakeholders who have been involved in this process.” 

“Too many Rhode Islanders are one medical crisis away from financial ruin,” added Speaker K. Joseph Shekarchi (D-Dist. 23, Warwick). “Medical debt can accumulate quickly and become a deterrent to seeking needed healthcare. This new program will bring real results for hundreds of families and enable them to have a clean state.” 

Senator Mark P. McKenney (D-Dist. 30, Warwick),sponsor of the Senate bill creating the program, echoed those sentiments, saying “no one should become trapped in a spiral of debt – with the heavy weight of stress that debt brings – simply because they get sick. Medical debt is a danger for public health, it holds back our economy, and it prevents individuals and families from achieving financial security. I was proud to sponsor legislation to provide medical debt relief, and I am grateful that our state is taking action through this important program.”

“Medical debt is a growing and persistent problem that so many of our friends and family consistently face,” said Representative Mary Ann Shallcross Smith (D-Dist. 46, Lincoln, Pawtucket), who sponsored legislation that prohibits debt collectors from reporting medical debt to credit reporting agencies alongside Senator Melissa Murray (D-Dist. 24, Woonsocket, North Smithfield). “Unlike other types of debt, where people spend beyond their means, medical debt occurs because people have the misfortune of getting sick” Representative Shallcross added. “This bill looks to provide compassion and relief to Rhode Islanders.”

“Medical debt is not only a financial burden but also an emotional one; it weighs on our communities in the form of anxiety and depression, in medications rationed and checkups delayed or skipped altogether,” shares Eva Stahl, Vice President of Public Policy and Program Management at Undue Medical Debt. “We are grateful to be partnering with the state of Rhode Island to tackle this crisis which affects an estimated 100 million people in the U.S. to the tune of at least $220 billion and we look forward to announcing medical debt relief in the state soon.”

“Medical debt is the number one cause of personal bankruptcy in the United States and is particularly a burden for people of color who, disproportionately, fall into medical debt,” said Economic Progress Institute (EPI) Executive Director Weayonnoh Nelson-Davies, Esq. “Often unexpected serious injuries and illnesses can cost thousands of dollars out-of-pocket to meet deductibles, and most households just don’t have that kind of money. EPI co-leads the Protect Our Healthcare Coalition, which lobbied for this medical debt relief in the 2024 legislative session. The General Assembly deserves credit for protecting Rhode Islanders and Treasurer Diossa and his staff deserve credit for leading the charge to bring quick relief to financially vulnerable Rhode Island families.”

Troy Peck, an advocate for the Leukemia and Lymphoma Society, experienced the staggering cost of medical treatment firsthand when his young daughter Aspen began her two-and-a-half-year battle with leukemia at age 1. "I'm proud to live in a state that recognizes the perils of medical debt and is working to help those affected,” Troy said. “When faced with life-threatening illnesses we should not have to consider whether the costs of treatment, direct and indirect, will bankrupt us in the end. I look forward to continuing my advocacy for medical debt reforms."

Undue’s model mimics that of for-profit debt buyers but uses government grants and charitable donations to purchase large portfolios of medical debt for pennies on the dollar. Undue Medical Debt offers a standard pricing model that corresponds to the fair market value of medical debt. Prices vary based on the age of the accounts. Older accounts are generally priced lower than newer accounts.

Once Undue purchases medical debt – held directly by the healthcare provider or by a debt buyer – it will work to identify those Rhode Island residents who are eligible for the debt forgiveness program. Any healthcare provider holding medical debt owed by a Rhode Island resident can partner with the state to participate in the Medical Debt Relief Program. However, participation is optional. Medical debt relief is source-based meaning Undue can only erase medical debts from participating partners.

To be eligible, an individual must be a Rhode Island resident who incurred debt in order to obtain necessary medical treatment and has an estimated income equal to 400% or less of the federal poverty line or possess medical debt that is more than 5% of their estimated income. 

Eligible Rhode Islanders will receive a letter directly from the General Treasurer and Undue, stating the amount of debt forgiven and the former holder of that debt (i.e. the medical provider). There is no application process. Debt will be cancelled automatically as it is identified, obtained, and abolished. Rhode Island Treasury will make a public announcement when medical debt is being relieved so the community can keep their eyes peeled for envelopes. There is no definitive timeline on when debt will start being erased. Undue will only abolish any medical debt deemed “medically necessary” on treatment files obtained from the provider. As such, “medical necessity” is determined by health care professionals, rather than as a matter of policy. 

For more information on Treasury’s Medical Debt program, visit Treasury.RI.Gov/Medical-Debt-Relief-Program.