Philanthropic organizations and donors joined together recently to erase more than $35 million of medical debt for Arkansas residents. News of the major contribution was shared during a virtual town hall meeting Thursday morning, hosted by Arkansas Asset Funders Network, Arkansas Community Institute (ACI) and Hope Policy Institute.
The contribution was made in a joint effort to alleviate medical and court costs carried by “Asset Limited, Income Constrained, Employed individuals” as well as people of color.
“Our current medical and court systems trap Arkansans in debt, harming already vulnerable populations as well as our state’s economic future,” said Bill Bynum, CEO of Hope Credit Union. “We must enact bold policy changes to mitigate wealth-stripping practices that perpetuate debt cycles.”
37 percent of Arkansans currently have debt in collections—nearly 10 percent higher than the national average, according to the Urban Institute. The data also reveals that medical debt and related collection abuses disproportionately impact communities of color.
23,896 Arkansans in all 75 counties benefitted from the more than $35 million payoff, with an average eliminated medical debt of approximately $1,500 per individual or family. The major contribution was coordinated by national nonprofit RIP Medical Debt on behalf of the Winthrop Rockefeller Foundation, HOPE, Arkansas Community Foundation and other donors. RIP helped by purchasing the medical debts in large, bundled portfolios for a fraction of their face value.
Recipients were randomly chosen based on qualifications and account availability. Those selected for debt abolishment will be notified via a mailed letter from RIP Medical Debt.
“Medical debt and court costs, fines and fees create significant barriers to wealth building,” said Neil Sealy, executive director of ACI. “When individuals are unable to pay collections, it can set off a catastrophic chain reaction with lasting impacts to their financial security and economic opportunity.”
Many organizations maintain that policy makers have the power to eliminate the burden and put vulnerable Arkansans on the path to economic opportunity.
During the virtual town hall meeting, the Arkansas AFN, ACI and HPI organizations shared federal, state and hospital-led policy recommendations that could help alleviate and proactively prevent medical debt. Panelists and presenters also highlighted how the court system, state legislature and local governments could enact changes to end the criminalization of poverty and reform debt collection practices.
Speakers included Judge Rita F. Bailey of the 31st State District Court, Bill Bynum of HOPE, Heather Larkin of the Arkansas Community Foundation, Signe-Mary McKernan of the Urban Institute, Kevin Ryan of the Fay W. Boozman College of Public Health at the University of Arkansas for Medical Sciences, Neil Sealy of the Arkansas Community Institute and Joanna Smith-Ramani of the Aspen Institute’s Financial Security Program.
Regarding medical debt, experts offered possible solutions including the enactment of state legislation to protect consumers from out-of-network medical bills; including medical debt elimination and protections in the state’s COVID-19 recovery plans; and passing state legislation to protect patients from abusive medical debt collection practices and limit reporting of medical debt on credit reports and cap interest charged on medical debt.
For court debt, possible solutions included identifying jurisdiction local fines and fees for potential elimination; implementation of “no suspension” of drivers licenses for failure to appear or pay fines; and amending the state’s debt collection laws to better protect consumers.
Experts also said that funders can help lessen the burden of medical debt and court costs by increasing Arkansans’ access to legal representation or legal counseling; calling for systemic reforms; elevating impacted residents’ stories; and funding advocacy, research and public-private pilot initiatives or programs.
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