ACC Democrats to eliminate medical debts of Athenians at highest-risk

UPDATE (12/23/22): The ACC Democrats say they raised $5,875.17 which they used to abolish $1,549,990.02 of local medical debt in Athens and surrounding counties.

A potential conflict of interest: The author of this article is a member of the Athens-Clarke County Democratic Committee, which paid him $800 last year to create and maintain their new website.

The Athens-Clarke County Democratic party is buying up and abolishing the medical debt of struggling Athens residents who are at highest risk of default due to healthcare expenses. Inspired by Stacey Abram’s Fair Fight PAC, which donated $1.34 million to abolish $212 million of medical debt last year, the ACC Democrats have set a goal to raise $5,000 which would allow them to abolish half a million dollars of medical debt.

How it works

The ACC Democratic Party is working with RIP Medical Debt, a nonprofit which accepts tax deductible donations to help them buy up this debt. Yes, you heard that right – you can purchase someone else’s debt. All debt in a capitalist economy, including medical debt, exists on the other side of the ledger as someone else’s asset. These assets are often bought and sold by investors and debt collectors.

This leads to an interesting question – how much is medical debt, as an asset, worth? The answer is, it depends!

You might think it would cost exactly the same as the amount owed by the patient, but that’s only true at first. If the hospital or doctor is unable to collect from the patient quickly, they might choose to sell the debt on the open market instead of continuing to badger the patient themselves. At this point professional debt collectors will purchase it. These profit-driven folks, of course, aren’t willing to pay 100 cents on the dollar, because how would they make money that way? 

The value of medical debt as an asset will start to fall once it hits the market to make room for debt collectors’ profit margins.

These debt collectors will pay the most for debts incurred by people who are highly likely to pay it back, meaning people with high credit scores. They’ll still buy the debt of those with bad credit, but they won’t pay as much because there’s a chance of losing money on the deal. For example, what if these people stop paying? On the very bottom of the pile, you’ll find the debt of those with the worst credit; these are people who are very likely to default. This debt is almost worthless because it has such low potential value as an asset. If someone defaults, the debt collectors don’t get paid and that debt would lose what little value it had.

Note this means the debt of those in the worst financial trouble can be purchased very cheaply. It can go for as low as one cent on the dollar.

This is how RIP Medical Debt is able to provide Stacey Abrams and the ACC Democratic party with such a high return on their investment, while at the same time precisely targeting those in the greatest need of assistance. They only buy the debt of those who are struggling the most, and thus are the easiest to help due to the logic of capitalism.

RIP Medical Debt was founded by two former debt collections agents who are now using their powers for good. Their nonprofit has a 100% rating on Charity Navigator.

But why does medical debt exist in the first place?

Despite RIP Medical Debt’s best efforts, a staggering $140 billion worth of medical debt still exists in the US, providing a steady stream of income for debt collectors. This is far more debt than in comparable democracies. The United States is unique in our lack of universal healthcare coverage, and patients here also pay extremely high out-of-pocket costs compared to other countries.

According to a poll by the Kaiser Family Foundation, half of adults in the US say they delayed getting healthcare over the past year because of the cost. And that includes people who have coverage – nearly half of those with insurance said they have trouble affording out-of-pocket costs.

These problems exist across the country, but are concentrated in the south and west where several Republican-controlled states have refused to expand Medicaid as provided under the Affordable Care Act of 2010.

Because of their refusal, these states have not seen much benefit from President Barack Obama’s signature legislation. According to research from Stanford economist Neale Mahoney, states that expanded Medicaid saw their medical debt growth rate cut nearly in half from 2013 levels, whereas the pace of new medical debt growth in states that did not expand Medicaid fell by only 10%.

Why hasn’t Georgia expanded Medicaid?

Obama said that the idea for the Affordable Care Act came from the Heritage Foundation, a conservative think tank. Politifact rates that statement as “mostly true.” 

Despite this, the Affordable Care Act has been a sensitive political issue among Republicans, who made over 70 attempts in the US House of Representatives to repeal the legislation. While some Republican-controlled states have chosen to expand Medicaid, a strong anti-Obamacare bias still holds among Georgia lawmakers. It took Georgia Republicans until 2019 to pass a proposal even to partially expand Medicaid using section 1115 waivers. Since then, the work requirement present in this plan has been rejected by the Biden administration, leaving the proposal in limbo for the time being.

Governor Brian Kemp is actually suing the federal government so he can continue to deny out-of-work Georgians access to healthcare instead of fully expanding Medicaid as has been proposed by Georgia Democrats.

Some Republicans have tried to justify their objection to full Medicaid expansion by citing the drain they feel an expansion would have on the state’s budget. This concern has been debunked the Commonwealth Fund, who found in a 2020 study that “the net cost of Medicaid expansion is well below the sticker price. In many cases, researchers have found that Medicaid expansion generates enough savings and/or new revenue to more than offset a state’s share of the cost.”

Abrams has promised to expand Medicaid if she’s elected governor. Until that happens, residents of Georgia seem likely to suffer from an increasing burden of unnecessary medical debt, which will benefit debt collectors. That’s why the ACC Democratic party’s campaign to abolish medical debt for those at highest risk of default in Athens is more than just a PR stunt. It has the potential to bring much needed relief to many residents of Athens and nearby counties who are on the brink of default.

You can donate to the ACC Democratic party’s debt abolition campaign through RIP Medical Debt here.

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