Groups eliminate more than $35M in Arkansans' medical debts

Nearly 24,000 Arkansans had their medical debts paid off by philanthropic donors and organizations, several groups announced Thursday morning in a virtual town hall meeting.

One in five Arkansas adults have medical debt, and the award announced Thursday totaled $35.2 million, helping 23,896 people in all 75 Arkansas counties, according to a news release.

The payoff covers about $1,500 per person, an amount that is "often disastrous" for Asset Limited, Income Constrained, Employed (ALICE) individuals, said Heather Larkin, president and CEO of the Arkansas Community Foundation.

Those benefiting from the payoff will receive letters from the national nonprofit RIP Medical Debt, which worked with the Arkansas Community Foundation, the Winthrop Rockefeller Foundation, Hope Credit Union and other donors to collect and distribute the money, according to the news release.

The nationwide growth of debt is not simply a result of bad financial choices, but instead due to the rising costs of meeting basic needs, such as housing, education, childcare and healthcare, said Joanna Smith-Ramani, managing director of the Aspen Institute Financial Security Program.

"These [expenses] are going through the roof and not keeping up with the income families have to pay for it, and you can't go without any of these," she said.

Arkansas has the second-most non-elderly adults in the nation with past-due medical debt, according to 2015 data from Urban Institute, an economic and social policy think tank.

Debt affects Arkansans of color in particular, with 56% facing debt of all kinds in the hands of collectors, said Karen Murrell, a project manager with the Asset Funders Network.

Thursday's town hall featured a panel of speakers with recommendations for debt prevention rather than simply elimination. Recommendations included lowering or capping interest rates on medical debt, limiting wage garnishments and protecting people from surprise medical bills.