Pittsburgh City Council passed legislation Tuesday to use $1 million in covid-relief funding to alleviate residents’ medical debts.
Councilman Bobby Wilson, D-North Side, who introduced the legislation last month, had initially suggested contracting with the New York-based nonprofit RIP Medical Debt to buy dischargeable health care debt from hospitals and forgive it.
Wilson last week amended the bill so the city could issue a request for proposals from any qualified company that may be able to partner with the city to discharge the debt.
The city will use American Rescue Plan Act funding to cover its costs.
The legislation could forgive about $115 million in health care debt owed by about 24,000 city residents, Wilson has projected.
In Allegheny County, 7% of households have health care debt in collections, according to the legislation. More than 100 million Americans — or about 41% of adults — have health care debt, which is the most common type of debt in the nation and the leading cause of personal bankruptcy.
The legislation will allow the city to team up with a company that can alleviate medical debt for residents who received health care on or after March 30, 2020.
People whose debt is discharged through the program must have a household income of no more than three times the federal poverty level.
Eligible account balances must have been written off as bad debt, and hospitals must consider the accounts to be dormant. Beneficiaries will not have to pay taxes on the discharge of their debt.
Cook County, Ill., used $12 million in ARPA funding to forgive up to $1 billion in health care debt for its residents. Toledo partnered with Lucas County, Ohio, to use $1.6 million in ARPA money to discharge about $200 million in medical debt for about 41,000 people there. Both places contracted with RIP Medical Debt.
