ST. LOUIS — A plan to pay off millions of dollars in St. Louisans' medical debt using a portion of the city's federal COVID-19 relief money is in action.
The debt relief will come as a result of a partnership between the city and an organization that buys medical debt for pennies on the dollar. The organization will be selected in August.
5 On Your Side spoke with Ward 14 Alderman Rasheen Aldridge, who sponsored the medical debt relief bill passed unanimously by the St. Louis Board of Aldermen in April. The bill went in to effect in May after Mayor Tishaura Jones returned the bill unsigned.
Alderman Aldridge said the plan would use $800,000 dollars in the ARPA funding to pay off up to to $80,000,000 worth of medical debt for St. Louis residents. We asked Aldridge what residents need to know to get their debt forgiven.
He said, "They don't have to qualify. They don't have to put in an application. They don't have to have like an income requirement. Basically, the vendor will work with the hospitals and look at people that live in the city of St. Louis … and clear off their medical debt. People whose medical debt is cleared will receive something in the mail from the hospital saying, basically, their medical debt is forgiven."
He said, right now, organizations or vendors that'll buy the debt are being interviewed and vetted by city officials, with a final decision on a partnership expected by Aug. 2.
Aldridge also spoke about how residents in his ward are affected by medical debt and why this cause is a personal one.
"I have a unique ward," he said. "I'm downtown, but I also represent a part of north St. Louis. People that live in those areas, I mean, the median income is around $20,000. It's easier said than done for people who have insurance, but if you don't, and once upon a time I was there... If you don't have insurance, you're like, 'I'm not going to the hospital because I ain't got time to pay that bill. I'm already struggling to keep a roof over my head.'"
He said the goal is to start relieving debt as soon as November.
5 On Your Side reached out to the mayor's office to ask why she didn't sign the bill. A representative issued the following statement: "The administration was and remains supportive of this program, as demonstrated by the fact that the City produced and posted the RFP for this in a little under two months. The lack of signature was not due to lack of support, sometimes the Mayor just doesn't get an opportunity to sign a bill. The administration has previously gone on the record about our support for this, going back to last November."
This new move comes as the Biden administration announced in June it's looking to erase medical debt from credit reports by the year 2025.
CNBC reported the rule change, announced by the Consumer Financial Protection Bureau on June 11, would prevent almost any medical debt from appearing on credit reports. In a statement, the CFPB said medical bills “have little to no predictive value when it comes to repaying other loans.“
In 2022, the three largest credit bureaus — TransUnion, Equifax and Experian — started removing paid medical debts from consumers’ credit reports. The following year, they stopped including outstanding balances under $500.
Even if the rule is approved, it’s not expected to take effect before 2025 and could be dismantled in the wake of the 2024 election.
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