After nearly 25 years working for credit unions, I recently took a break from the professional world. Rather than catching up on my Netflix shows, I hatched a plan to make one of my long-held dreams come true: to cycle through the United States from San Diego, California to St. Augustine, Florida. . Over three thousand miles with my trusty steel bike, clothing, and camping gear was the plan for this self-sufficient trip.
Fast forward 40 odd days and I completed the ride. There are many stories, images and memories to share that have invigorated my soul and strengthened my faith in humanity, but I would like to focus on a key part of the journey that has nothing to do with it. with pedal strokes, spandex or unexpected sores. in unexpected places.
Today, 44 million Americans are in medical debt totaling $ 1,000 billion, creating a pernicious cycle of poor financial and physical health. Researchers have reported that high levels of financial debt are associated with mental illness, acute biological illnesses, and poorer overall health (source: ScienceDirect). Financial stress breeds high risk behaviors. These high-risk behaviors lead to poor health outcomes. And the cycle turns into an even greater deterioration in financial and physical health. Additionally, stories about the human costs of medical debt and cancer diagnoses are all too common and heartbreaking in equal measure.
Most unpaid consumer debt is discretionary, but medical debt is a uniquely American problem. Medical debt acts as an accelerator of the financial-physical health link. For example, 66% of all consumer bankruptcies are related to medical debts, 25% of all outstanding credit card debts are used to fund medical debts, and 50% of Americans report forgoing medical care because of the problems. high costs of care, according to recent studies. .
As institutions that place service above profit, credit unions are in a potentially unique position to help resolve parts of the medical debt debacle. The last thing a credit union wants are consumers who are overwhelmed by a source of debt that is usually caused by factors beyond their control. Poor financial results mean fewer mortgages, car loans, and savings accounts for a significant portion of the population.
I predicted that the bike ride might spark the interest of a few people. So I started a medical debt fundraiser with a nonprofit called RIP Medical Debt. The RIP clears the debt of Americans whose lives have been destroyed by medical expenses. Founded in 2014 by two former executives in the collection industry, RIP rose to national prominence during an episode of “Last Week Tonight with John Oliver” which was viewed nearly 10 million times, where RIP facilitated the $ 15 million medical debt forgiveness for just $ 60,000. . RIP takes donations and buys debt in pooled portfolios, millions of dollars at a time at a fraction of the initial costs. On average, RIP leverages every dollar donated 100 times. Basically they’re doing a jiu jitsu move on Wall Street which is a beautiful thing to see.
Although I wasn’t as successful as John Oliver, my little network raised almost $ 40,000 which resulted in a purchase and repayment of $ 4.1 million of medical debt for 3 481 people from California to Florida and everywhere in between! Pretty cool, but the success of this fundraiser has only scratched the surface of what is possible. The people who have been helped are on or near the poverty line, their medical debts represent a significant part of their already modest income and they have likely been tracked down by debt collectors, resulting in stress. huge financial and physical. In other words, we bought a nice bandage for a few thousand people, but how do we create more systemic impact, sooner?
As I cycled across the country, I had plenty of time to think about this complex issue. A few ideas leaked out and I discussed these concepts with smart people. Potential solutions span the gamut of responses from public policies, nonprofits, start-ups, technology, and partnerships with outside industry. Are we creating a huge charity campaign to write off billions in medical debt on behalf of credit unions? Are we creating a financial product that can be used by hospital finance professionals? Will we integrate healthcare financing into mobile / online banking offerings of credit unions? Are we creating a CUSO to solve this problem? Credit unions owe these (and more) questions to the 44 million Americans with medical debt.
Since taking my bike apart in Florida, I have come back to reality and have been working with credit unions across the United States. medical debt crisis.
George Hofheimer is the founder of Hofheimer Strategy Advisors in Madison, Wisconsin.