This group just paid off $8 million in medical debt for people in Eastern Kentucky

A national nonprofit organization has paid off roughly $8 million in outstanding medical debt for hundreds of people across Appalachia, the bulk of whom live in Eastern Kentucky.

RIP Medical Debt, a New York-based nonprofit debt buying company, announced last week it had paid outstanding medical bills for people in more than 50 counties across Central and Eastern Kentucky, as well as residents in Appalachian regions of Virginia and West Virginia.

Letters announcing the news were mailed to Kentuckians on Monday, company co-founder Craig Antico said Friday.

The goal is to dissolve $240 million worth of debt across the region, helping provide hope for many who face the “major crisis” of paying for health care, Antico and co-founder Jerry Ashton said.

Founded five years ago, the company has paid off $800 million in medical debt so far for about 300,000 people across the country. Antico, a former debt collector, anticipates that figure will swell to $1 billion by the end of the year. Normally people within a specific region or industry are selected for debt payoffs.

Last November, McClatchy, which owns the Lexington Herald-Leader, launched a 10-part documentary series in partnership with RIP, chronicling the lives of Afghanistan war veterans post-war in an effort to erase medical debt for other service members and veterans.

The process works like this: Antico and his company purchase bundled debt portfolios from debt sellers and medical providers that are the least likely to be repaid. Least likely because the debt has existed for typically between two and seven years, and the people who’ve accrued this debt earn less than two times the federal poverty level.

Debt collectors, knowing this type of debt is unlikely to be repaid, have a vested interest in selling it to another debt buyer willing to offer immediate money, even if it only covers a fraction of the total amount. This, in turn, allows Antico to purchase bundles of old debt for pennies on the dollar and abolish it at often 10 or 15 percent of the original cost. In other words, a $100 donation through the organization can slash up to $10,000 in medical debt.

The company also pays off Medicare debt, but it’s typically a nominal amount in comparison, Antico said. Of the total debt the company has paid off since 2014, about 5 percent had been accrued through Medicare.

The model of the nonprofit allows anyone to donate to payoff debt for a specific population or area. Primary contributors in alleviating Eastern Kentucky’s debt were Jim and Sharon Branscome, former residents of Appalachia and employees at the Appalachian Regional Commission. The son of a former coal miner in western Virginia who died of black lung disease, Jim Branscome said part of the intention behind their donation is to wipe out medical debt for disabled coal miners and those struggling with opioid addiction.

“We view this effort … to be the most effective way we have found to have direct impact on improving the lives of people in the mountains,” the couple said in a statement.

The company regularly seeks to abolish debt for people earning less than twice the poverty limit. A single person earning $12,500 a year is considered impoverished, according to the U.S. Dept. of Health and Human Services. For a family of five, the poverty level is just over $30,000.

Kentucky was the fifth poorest state in 2017, where 17 percent of residents lived at the poverty level and more than 20 percent lived below it. These financial challenges are more acute in rural areas, especially when it comes to accessing and paying for health care, said Joe Benitez, an assistant professor in the University of Kentucky’s Department of Health Management and Policy.

Thirty-seven of the 54 counties that make up Appalachian Kentucky were considered economically depressed in 2018, according to the Appalachian Regional Commission. Higher unemployment often means fewer people with affordable health insurance. Lessened coverage, combined with fewer health clinics, hospitals and specialists can at times force residents to seek more expensive out of network options, even for minor medical issues, Benitez said. The average amount of medical debt for one family across the country is $681, whereas in Appalachia, it’s $850.

In 2017 nationwide, about 18 percent of people had outstanding debt owed to a collection agency, according to the Urban Institute. In Kentucky, a state of almost 4.5 million people, 27 percent of the population owe a collection agency for a combined $1.5 billion in recent medical debt. RIP estimates the total amount stretching back seven years is closer to $17.5 billion.

For the more than 663,000 people who live In the Eastern Highlands region of Kentucky, the number of people with medical debt is much more exaggerated. On average, about 35 percent of residents who live in the swath of the state that stretches from Bell to Carter counties and Pike to Rockcastle counties live with medical debt, totaling $280 million. Some counties have more residents who owe on medical bills than who don’t, including Carter County, where 52 percent of its population in 2017 owed collection agencies.

By alleviating a portion of these costs and striving to make a bigger regional dent in the future, Antico and Ashton said they hope to let people know “they aren’t facing the burden of medical debt alone.”

This story was originally published August 1, 2019 at 10:19 AM.