The Medical Debt Pandemic

They used to tell me I was building a dream With peace and glory ahead Why should I be standing in line Just waiting for bread?

Once I built a railroad, I made it run Made it race against time Once I built a railroad, now it's done Brother, can you spare a dime?

According to the Economic Policy Institute, in 2015, the top 1% of Americans made 26.3 times more than the rest of the country. The average annual income for the 1% was $1,316,985 and it took an average annual salary of $421,926 to break into the exclusive club -- a figure lower than many realize. In 2015, this teeny tiny sliver of Americans took home 21% of all U.S. income, the highest percentage since before the Great Depression.

The expense part of the equation is just as much of a problem. As I wrote about in a previous post, over 44 million U.S. student loan borrowers owe a total of $1.5 trillion in debt. What's more, a report from the Federal Reserve indicated that 23% of adults did not expect to be able to pay all of their current month's bills in full. And if faced with an unexpected emergency expense of $400, 44% would have no way to pay the amount or would need to borrow or sell something to do so.

Then there's that pesky medical debt. The Urban Institute reports that 23% of insured adults in the U.S. have some form of medical debt. For the uninsured, it's 31%.

All but a select few high-priced insurance plans have some form of deductible. Many have ones as high as $10,000 or more a year. That's a whopping amount of money out of a patient's pocket before insurance kicks in.

It's no wonder so many Americans are in over their heads. We talk a lot about credit card debt in this country, and rightly so. But nearly 50% of all credit card debt in the U.S. is from medical debt. Overall, medical debt contributes to 60% of all bankruptcies.

Desperate, exasperated with insurance companies, and with little action coming from federal and state governments to fix out-of-control health care system costs, Americans are turning more and more to one another for help. And the conduit for their financial salvation is GoFundMe.

The platform calls itself "the leader in online medical fundraising," which somehow became a thing in this country. GoFundMe hosts over 250,000 medical campaigns EACH YEAR. In all, people raise $650 MILLION per year to try and cover their health-related expenses.

Let that sink in for a moment.

But GoFundMe isn't the only option when it comes to tackling medical debt. The non-profit organization, RIP Medical Debt, was established to come at the problem a different way.

Turns out nearly any company can (and many do) buy people's medical debt. Often at pennies on the dollar. As with any debt, the person who owns it can forgive it. Thereby, wiping the slate clean. And that's what RIP Medical Debt facilitates.

According to its website, it "locates, buys and forgives medical debt on behalf of individual donors, philanthropists and organizations who step up to provide financial relief for people burdened by unpaid and unpayable medical bills."

Focusing on buying the debt of people who "earn less than two-times the federal poverty level, have debts that are 5% or more of gross annual income, are facing insolvency," the organization has abolished $434 million in medical debt to date. Overall, Americans owe about $750 BILLION, so it's just a drop in the bucket, but not to those it has helped.

Two years ago, John Oliver famously teamed up with RIP Medical Debt to forgive nearly $15 million in medical debt. It was a huge boost of publicity for the non-profit, not to mention the impact it had on families.

NBC 5 in Chicago and NBC Universal Owned Televisions Stations got in on the action as well, making a donation to RIP Medical Debt to eliminate $2 million worth of medical debt for residents of the Windy City. Other affiliates and Spanish-language network Telemundo, which is owned by NBC, have done their part too. As have ABC, CBS and FOX affiliates. And just last week, the New York Times profiled two women from Ithaca, New York, who raised $12,500 that RIP Medical Debt used to wipe out $1.5 million in medical debt for 1,284 residents of New York State.

It's an ingenious way to try and make a difference. With insurance companies willing to sell Americans' medical debt for almost nothing, why not jump in on the action? Instead of that debt going to harassing collection agencies who think people are sitting on a pile of money and are choosing not to pay their medical bills, why not put it in our hands so we can relieve some of our neighbor's burdens?

This holiday season, if you can afford to open your wallet to help others in need, please consider making a life-changing donation to RIP Medical Debt. It's rare for us to be able to point to a multi-billion dollar problem and say, "I can help make that better." On this one, we actually can. The impact of our action can help families in our communities. Maybe even our own families.