Billions of dollars of medical debt owed by nearly a million Los Angeles County residents could be purchased by the county and retired, according to a proposal set in motion on Tuesday, Oct. 3.
The L.A. County Board of Supervisors voted 5-0 to explore a plan to purchase $2.6 billion in medical bills owed by people throughout the county for pennies on the dollar. If implemented, the action would relieve families of what can become a lifetime burden and often prevents them from seeking medical care.
“Medical debt can contribute to food insecurity and housing instability,” said Fourth District Supervisor and board chair Janice Hahn, co-author of the motion along with Second District Supervisor Holly Mitchell. “Once someone has medical debt it becomes a barrier to assessing their healthcare.”
Hahn said the motion is a way to address medical debt experienced by up to a million county residents. The process would cost the county only a fraction of the amount owed to buy the debt, then retire it, the county reported.
Here’s how it would work:
When people accumulate debt from unpaid medical bills, eventually hospitals and medical establishments sell the debt to for-profit collection agencies. If not paid, these agencies often win judgments in court that can result in liens on payroll and properties against the patients.
Los Angeles County intends to intervene by buying out the residents’ debt for pennies on the dollar.
The proposal could wipe out billions of dollars in medical debt at a cost to the county of only millions, Hahn explained. The potential cost to the county would be $24 million to retire $2 billion in medical debt spread over the next two to three years, according to the county Department of Public Health (DPH).