$2B NYC Medical Debt Relief Will Help 500K City Dwellers: Mayor

NEW YORK CITY — Up to 500,000 New York City dwellers soon could wave goodbye to burdensome medical debt.

A new city program will relieve more than $2 billion in medical debt for those New Yorkers over three years, said Mayor Eric Adams Monday.

The effort — which will be the biggest such debt relief program launched by a municipality — aims to clear the ledger for hundreds of thousands of people so they don't have to choose between medical care and other essentials, Adams said.

The mayor said it'll all be made possible by an $18 million investment by the city toward RIP Medical Debt, a New York City-based nonprofit that buys up debt portfolios on the cheap and relieves it.

"Let me repeat that: $18 million is going to relieve $2 billion in medical debt," Adams said.

RIP Medical Debt previously came into the spotlight during a charitable stunt carried out by John Oliver, the host of HBO's Last Week Tonight, in 2016.

During a segment on predatory debt collectors, Oliver showed how easy it was to start a debt-buying company that bought a medical debt portfolio for less than a penny on the dollar. But instead of trying to harass the 9,000 likely financially burdened people in the portfolio, Oliver partnered with RIP Medical Debt to forgive their combined $15 million medical debts.

Allison Sesso, president and CEO of RIP Medical Debt, said with the city's $18 million that the nonprofit will buy up debts of people at 400 percent of the poverty line or below, or if their debts are 5 percent or more of their income.

The "magic" of turning that $18 million into $2 billion of relief comes down to how the debt market operates, she said.

"There is a for-profit debt market that prices debt very low, and in order for for-profits to make money they have to make the cost of that debt very, very low in order to make money back because frankly, the people who owe the debt can't pay it," she said.

The debt relief program will begin early this year, City Hall officials said.

New Yorkers don't have to sign up, but up to 500,000 will receive a notice if their debt is forgiven, officials said.