Orange County leaders delay vote on medical debt cancellation initiative

After initially green-lighting an initiative in February that would leverage federal pandemic relief funds to cancel hundreds of millions of dollars in medical debt for local residents, the Orange County board of commissioners on Tuesday delayed a vote on final approval of the project.

The decision to delay the initiative initially championed by local community organizers came after several commissioners voiced questions about the logistics of the process and expressed concerns about whether their investment would have a truly meaningful impact.

A county administrator was able to answer some questions. But Undue Medical Debt, the nonprofit that the county would be working with on the project, did not make a representative available at the meeting to answer others.

This ultimately made some commissioners uncomfortable with moving forward on a vote.

“We’re doing the right thing here. We're paying for this debt. How does that actually affect our residents’ credit scores and credit reports?” asked county commissioner Nicole Wilson, who expressed concern that the process would be incompatible with the ways that the debt collection process works. “I want to be able to hear from them [Undue Medical Debt] and see that before we sign off.”

When reached for comment, the nonprofit's vice president of communications, Daniel Lempert, told Orlando Weekly  that they offered to join the Tuesday meeting  virtually, since their leadership is based in New York.

“It’s our understanding that wasn’t an option,” wrote Lempert over email.

“We’re excited about the opportunity to facilitate medical debt relief for qualifying Orange County residents,” Lampert continued, “And we’ll make ourselves available in the near future to answer any lingering questions from the county board and hopefully finalize the contract.”

Undue Medical Debt, a nonprofit formerly known as RIP Medical Debt, has worked with states, municipalities, and health systems across the country to literally buy up medical debt for pennies on the dollar and pay it off.

The nonprofit organization, based in New York, was founded in 2014 by former debt collectors who wanted to be part of a solution to the devastating problem they saw on the collection side.

Over the last decade, the nonprofit says it has erased more than $12 billion in debt for over 7 million families. Every one dollar donated erases an average $100 in debt, according to the nonprofit.

Orange County commissioners gave initial approval to a $4.5 million investment in the initiative in February, which would be funded entirely by unspent federal dollars received by the county through the American Rescue Plan Act.

According to county documents, that $4.5 million would be capable of abolishing an estimated $424 million of medical debt for approximately 154,593 eligible Orange County residents.

As part of the project outline already drawn up by county staff, those who have their medical debt cleared would be notified by the nonprofit that their debt had been cleared (through an investment by the county). According to Undue Medical Debt, residents would also be notified that their negative credit marks associated with the debt would be removed.

In addition, according to county documents, the nonprofit would also include information on “how to access hospital charity care, no-cost or low-cost medical care, and no-cost financial assistance,” as part of a mitigation strategy to help prevent future debt issues.

Central Florida Jobs With Justice, a coalition of labor, faith and advocacy groups, first brought this idea to Orange County commissioners as a community initiative. Orange County residents also shared their own stories about how medical debt impacts them personally.

“When I think of a life without medical debt, I don’t think of buying a fancy car or going out to a nice restaurant,” wrote local resident and Central Florida Jobs With Justice volunteer Eimar Roy, in a recent op-ed for Orlando Weekly in support of the initiative.

“I think about the people who have swiped their card for me at the grocery store when my transaction was declined, and I think about paying it forward,” continued Roy, who struggled during the COVID-19 pandemic after she became unemployed and later contracted COVID-19, exacerbating pre-existing medical conditions.

“I think about how much more present I could be for all the beauty and goodness this life has to offer if my mind weren’t constantly ravaged with worry about my house being foreclosed.”

But, despite the fact that states like Connecticut and New Jersey and municipalities including Cook County, Chicago and New Orleans have already worked with Undue Medical Debt on similar initiatives for their own communities, both Wilson and commissioner Mayra Uribe hesitated on making a final decision.

The nonprofit’s process of actually buying up and abolishing residents’ medical debt involves directly buying the debt from hospital systems and other healthcare providers.

Two major local hospital systems — Orlando Health and AdventHealth — have already indicated they’re willing to participate, according to the county.

But both Uribe and Wilson expressed concern over whether this process will help people whose debt has already been sent to collections, and what the initiative can realistically accomplish.

“Those debts have already been sold,” said Wilson. “People who are getting notices now get them from a third party provider. It's off the books of Advent Health and Orlando Health.”

County administrator Warren Lakhan, who provided a presentation to commissioners on the initiative Tuesday, sought to relieve her concerns, sharing that hospital systems often still hold this debt, but Wilson felt she didn't have enough information from the nonprofit they'd be partnering with to make an informed decision.

Commissioners Uribe and Mike Scott, who has himself struggled with medical debt in the past, similarly questioned whether this investment would live up to its promise, or just serve as a stopgap solution to help a limited pool of people.

Medical debt is a widespread problem, as the leading cause of bankruptcy in the United States. A KFF analysis found that four in ten U.S. adults report having debt due to medical or dental bills, with Black and Hispanic households disproportionately impacted.

One in four adults also say that in the past 12 months they have skipped or postponed getting health care they needed because of the cost.

While over 90 percent of the U.S. population has some form of health insurance, insurance coverage alone can be insufficient to cover the cost of a major medical procedure, treatment for cancer or chronic illness. The U.S., to date, is the only industrialized country that doesn’t guarantee health care for its citizens through universal healthcare coverage.

Representatives of Undue Medical Debt have openly admitted that clearing people's medical debt won't necessarily prevent future troubles with medical bills, or other affordability issues.

“What we do doesn’t solve the problem, but it removes some of the burden,” Allison Sesso, the nonprofit's president and CEO, recently told The Guardian, after a study was released indicating that the impact of clearing medical debt may be limited.

A medical debt cancellation program in Orange County would be fairly simple for residents, at the very least. Rather than setting up an application process, Undue Medical Debt, in collaboration with Advent Health and Orlando Health, would instead be able to identify those who owe debt, clear it, and notify those individuals after.

Those who qualify would include individuals who have experienced negative economic impacts caused by the COVID-19 pandemic, and those who are low income (living in a household with income at or below 400% of the federal poverty line) or who have medical debt that equals or exceeds 5 percent of their total household income.

For reference, 400 percent of the Federal Poverty Line in 2024 is $60,240 for a single-person household, or $103,280 for a household of three.

A proposed $4.5 million investment would be capable of abolishing an estimated $424 million of medical debt for over 150,000 Orange County residents.

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The proposed program in Orange County would be a two-year project lasting through Sept. 30, 2026, if approved, overseen by the Orange County Comptroller’s Office and the Community and Family Services Department.

Ultimately, the board of county commissioners opted to delay a final vote of approval on the $4.5 million agreement with Undue Medical Debt on Tuesday, in order to get more information to address commissioners’ concerns.

Mayor Jerry Demings seemed unenthusiastic about the delay, but was receptive to his fellow board members' concerns. “It's not that we don't support the medical debt relief program. What we want to make certain is that the individuals who are COVID-impacted have a positive outcome with their credit score, and that the debt is indeed relieved.”

Central Florida Jobs With Justice, which initially pushed for a $8.7 million investment from the county to clear an estimated $827 million in medical debt for 300,000 local residents, did not immediately respond to our request for comment on the delayed vote.

There was no clarification from the board on when a final vote might take place. Orange County, which received a total $270.8 million in funds through the American Rescue Plan Act, had about $23 million left to allocate as of February, with a limited amount of time to do so.

Under spending rules, the county has to have all of their funding financially obligated by the end of 2024, and make sure it’s fully spent by the end of 2026.

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