Arkansas groups erase millions in medical debt
Nearly 24,000 Arkansans in all 75 counties have had their outstanding medical bills paid off thanks to a coalition of nonprofits seeking to raise awareness of the negative impacts of debt.
The $35.2 million debt erasure was made possible by donors including the Arkansas Community Foundation, the Hope Credit Union and the Winthrop Rockefeller Foundation.
Heather Larkin, president and CEO of Arkansas Community Foundation, says the average debt erased was $1,500.
“But we have to remember that almost half of Arkansans are what we call ALICE; asset-limited, income-constrained and employed. ALICE families barely make their budgets balance, and debts like this, $1,500, is simply overwhelming to an ALICE family,” Larkin said.
Larkin announced the debt buy in a virtual news conference Thursday along with groups like the Arkansas Community Institute, the Arkansas Asset Funders Network and the Hope Policy Institute to discuss trends for medical and legal debt in the state.
Joanna Smith-Ramani with the nonprofit Aspen Institute Financial Security program says, while debt appeared to go down in the early days of the COVID-19 pandemic, that’s not expected to continue.
“We were spending less, families had all the cash transfers that were coming from the government to make up for the loss of income that people were actually using to pay down debt. But we are now coming back, we are growing back to pre-COVID levels of debt,” Smith-Ramani said. “When I talk to consumer credit counselors, they expect all the debt to accrue back up and all the financial insecurity to be even more compounded.”
Smith-Ramani says the most common form of debt in Arkansas is medical debt, for which the state ranks second in the nation for non-elderly adults. About 37% of Arkansans report having some form of medical debt, with a median amount of $662.
Signe-Mary McKernan is with the Urban Institute, a Washington, D.C.-based think tank. She says medical debt tends to disproportionately impact communities of color both in Arkansas and the U.S. as a whole.
“In Arkansas, 23% of people living in communities of color have medical debt in collections, and that’s compared with 19% of people living in majority white communities. And this finding’s consistent with what we know about health insurance and also about wealth inequality. In Arkansas, people in communities of color are twice as likely to be uninsured as people in white communities,” McKernan said.
In Arkansas, 56% of communities of color report having debt in collections. Neil Sealy with the Arkansas Community Institute says a number of changes can be made to help people deal with debt, or avoid it altogether.
“A good practice for the courts is to determine someone’s ability to pay a fine or a fee and work with them. I think hospitals can hold debt… we did pass Medicaid expansion, and should have people ready to help people apply,” Sealy said.
Advocates also recommend assessing the effectiveness of court fines and fee structures and pursuing widespread reform.
Overall about 37% of Arkansans have some form of debt, compared to 29% of Americans overall. Sevier County in southwest Arkansas has the highest share of medical debt in collections at 31%.