In this file photo, a doctor takes a patient’s information outside the emergency room at St. Mary Medical Center, Monday, Dec. 14, 2020. Photo by Brandon Richardson.

Los Angeles County leaders will invest $5 million in a pilot program with a goal of wiping out $500 million in medical debt for as many as 150,000 low-income county residents.

The county Board of Supervisors agreed to partner with a nonprofit called Undue Medical Debt, which purchases unpaid debt for pennies on the dollar like many collection companies. Instead of attempting to collect that debt, however, the organization forgives it.

A study last fall showed as many as one in 10 county residents had crippling medical debt worth $2.9 billion, most of it from unavoidable hospital stays. This affects their ability to buy or rent a home, secure employment and buy basic necessities, said Supervisor Holly Mitchell.

“We have made a commitment to addressing poverty, and this is a main contributor to holding people in poverty,” she said.

Supervisor Janice Hahn sponsored the item following a medical debt summit in April with a coalition of experts, policymakers and industry officials. She was absent from Tuesday’s meeting, but said in a statement that “we have a moral obligation to seize this opportunity to help these LA County families.”

The program will target the lowest-income residents first, though specifics around who will qualify have yet to be determined. Mitchell said they are looking at a similar program in Cook County, Illinois, which targets those with medical debt that is more than 5% of their total annual income.

Support watchdog journalism

Who has eyes on City Hall? We do. The Long Beach Post is now a 501(c)(3) nonprofit. Donate now to support independent accountability journalism that cuts through the political spin.

The $5 million investment will come from the County Department of Public Health budget, with the hope that other partners — private clinics, hospitals, labs and others — will also contribute and participate.

Supervisors also want to ensure that additional measures are taken to hold insurance companies responsible for some of the outstanding bills; many of the people saddled with debt have some form of coverage, officials said.

Barbara Ferrer, the county director of Public Health, said they estimate there are about 800,000 people in the county with medical debt ranging from $500 to over $1 million. Of those, 343,000 are people who make less than 200% of the federal poverty line and have medical debt worth $1.2 billion.

“How is that possible … with so many people who are in fact low-income and now eligible for an insurance plan,” Ferrer said. “That’s a staggering number of people with very little income who are accruing enormous amounts of debt.”

The recent study by the county showed 27% of people with high medical debt had no insurance, and the rest had either private or public plans.

The majority of those with high bills have chronic conditions like Type 2 diabetes and asthma, and a disproportionate number are people of color.

More details on how to apply for the program will come in the next few months, officials said. Once the medical debt pilot program is completed, Public Health will report back to the Board of Supervisors on its effectiveness and potential expansion.

Melissa Evans is the Chief Executive Officer of the Long Beach Post and Long Beach Business Journal. Reach her at [email protected], @melissaevansLBP or 562-512-6354.