Paying off people’s medical debt has little impact on their lives, study finds

A randomised evaluation by the Abdul Latif Jameel Poverty Action Lab (J-PAL) North America has found that the impact of buying up medical debt to help American citizens who owe hospital bills, does not actually improve mental health nor the credit scores of debtors. The study, published as a National Bureau of Economics Research working paper, is one of the first to look at the impact of debt relief on individuals. It found that those whose bills had been paid off were just as likely to forgo medical care as those whose bills were left unpaid.

“It’s a big policy area right now, so it's important to show rigorously what the results are,” says Amy Finkelstein, co-scientific director of J-PAL North America, whose research has revealed significant positive effects of gaining health insurance. “The idea that maybe we could get rid of medical debt, and it wouldn’t cost that much money but it would make a big difference, was appealing,” she added. “What we learned, unfortunately, is that it doesn’t look like it has much of an impact.”


Over the past decade, R.I.P. Medical Debt has grown from a tiny nonprofit group that received less than $3,000 in donations to a multimillion-dollar force in health care philanthropy.

It has done so with a unique and simple strategy to tackling the enormous amounts that Americans owe hospitals: buying up old bills that would otherwise be sold to collection agencies and wiping out the debt.

Since 2014, R.I.P. Medical Debt estimates that it has eliminated more than $11 billion of debt with the help of major donations from philanthropists and even city governments. In January, New York City’s mayor, Eric Adams, announced plans to give the organization $18 million.

But a study published by a group of economists on Monday calls into question the premise of the high-profile charity. After following 213,000 people who were in debt and randomly selecting some to work with the nonprofit group, the researchers found that debt relief did not improve the mental health or the credit scores of debtors, on average. And those whose bills had been paid were just as likely to forgo medical care as those whose bills were left unpaid.

The New York Times