What happened to Akron council's plan to erase millions in medical debt for residents?

By Doug Livingston, Akron Beacon Journal / June 29, 2023

Nearly three months since Akron's elected officials agreed to leverage $500,000 to retire tens of millions of dollars in medical debt held by residents, there's little to no progress to report.

For each dollar it committed, Akron City Council celebrated the possibility of erasing $100 in medical debt that cripples family budgets, tanks credit scores and drives bankruptcies. The math comes out to $50 million in medical debt erased with a $500,000 investment.

This week, the consultant the city hired to stay compliant when it spends $145 million from the American Rescue Plan Act spoke glowingly of RIP Medical Debt, a non-profit organization that's working with Cleveland, Chicago and other Midwest communities to retire hundreds of millions of dollars in medical debt.

But instead of contracting that organization, Akron Mayor Dan Horrigan is shopping around. One council member is now voicing concerns that the city is wasting precious time by looking to bid a job that no one else can do on the scale that Akron needs, despite her ongoing criticisms of the mayor issuing no-bid contracts.

"If we’re going to use RIP Medical Debt, we’ve got to get moving to hold a place in line," said Ward 1 Councilwoman Nancy Holland, who started looking into the issue of medical debt late last year after students at Northeast Ohio Medical University brought it to her attention.

How Akron got medical debt relief in this year's budget

Founded in 2014 by two former debt collection executives, RIP takes donations or government investments and buys large bundles of medical debt at a steep discount — $1 usually can leverage $100 in debt relief. The debt erasure is a gift with no tax consequences to recipients. 

The organization has relieved more than $8.5 billion in debt for nearly 5.5 million individuals and families in all 50 states and Washington, D.C., according to Daniel Lempert, vice president of communications for RIP.

Holland researched the organization and found a growing number of cities in Ohio — including Cleveland, Cincinnati and Columbus — are hiring or considering hiring RIP.

By early March, Holland had then candidate for mayor Marco Sommerville, as well as the president and vice president of council, on board with a plan to find $1 million in unspent federal stimulus funds so RIP could negotiate with local hospitals and settle past due medical bills for thousands of Akron residents for a penny on the dollar.

Despite Sommerville being a senior adviser to the mayor, the group could not get Horrigan to commit federal funds to jumpstart the process. So, council members pushed the mayor to free up federal stimulus dollars after his original 2023 operating budget mentioned nothing about retiring medical debt. By the end of the budget negotiations, Horrigan earmarked $500,000 for a medical debt relief program, which Akron City Council approved in passing the budget.

'No definitive timeline for this work to be completed'

The budget passed at the end of March. Holland said she still gets calls, emails and comments at the grocery store from constituents wondering what’s become of the medical debt relief plan.

"It's not so much that there's an expectation that everybody's was going to get their medical bills paid by June. That's not it. It's that this is and was always intended to be the truest, most upstream solution to a whole host of troubles that we have in the city of Akron," Holland said, rattling off the ways that medical debt can crush family finances and even make people unemployable.

"In my humble opinion, there's never been a better use of ARPA dollars. And here we are, every aspect of my job has been completed. And there's been no good reason advanced or articulated for this stall."

Holland said she's been told the program might not get off the ground this year.

In an email response, the mayor's office explained that there's no rush to hire RIP.

"The next step for the medical debt relief program involves connecting with each of our local hospitals to determine what data they have available on their patients with medical debt and how that's organized from institution to institution," said Stephanie Marsh, chief communications officer for Mayor Horrigan. "That data will help inform the necessary scope of work for the program so that the city can issue an RFP for a company to facilitate the program and best work with all of our local hospitals.

"There is no definitive timeline for this work to be completed," Marsh added.

RIP comes highly recommended by consultant Akron hired

In an update on how the city has been spending its $145 million allocation of ARPA funds, Holland got the opportunity to quiz Mitch Lindstrom from Guidehouse on whether RIP is a reliable vendor. Akron hired Guidehouse to ensure it remains complaint with federal rules on spending ARPA dollars.

Medical debt relief:Some Ohio cities are erasing their residents' medical debt. Here's how it works

Holland asked Lindstrom about Guidehouse’s work with Cook County, which includes Chicago. The Illinois county was the first in the Midwest to hire RIP to retire medical debt.

"Their program is much larger than what Akron is proposing," Lindstrom told Holland. "So far, they’ve moved forward with it glowingly. I think they’re a low-risk subrecipient, which means that’s good news in the spectrum of risk, meaning they’ll likely have the capacity to comply with all federal guidelines."

Lindstrom said he's spoken with Akron city administrators on the best way to go about spending federal dollars to retire medical debt.

“We’ll never tell the city who to fund or not to fund," he said. But RIP has got “as good of a grade as you’ll get from me.”