Should Churches Pay Off Medical Debt for the Poor?

I’ve seen news stories of churches who pay off medical debt that has gone into collection for pennies on the dollar. Economically, it seems like a no-brainer. What a gift you can give someone! But the tie to relationship is very weak. The church doesn’t know who the patient is, and there’s probably no contact between the two. So my question is, should churches do this? What questions should they ask themselves first?

You’re referring to RIP Medical Debt, an organization founded by two former debt-collections executives in 2014. Here’s how it works: when patients can’t pay their medical bills, they’re sold to debt collectors for pennies on the dollar. Then the collector tries to get as much as they can out of the patient. If the patient owed the hospital $4,000, and the debt collector buys it for $40, and he can get even $500 out of the patient, he’s made a profit.

With the help of donors, RIP Medical Debt has been buying that debt for $40 and forgiving it. In the last six years, they’ve cleared out nearly $3 billion of medical debt for more than 2 million Americans.

Many of those donors are churches: a Nebraska congregation wiped out $7.2 million in medical debt, a New Jersey church paid off nearly $14 million, and a Washington church forgave $30 million.

While each patient gets a letter telling them who paid off their debt—and while churches are able to pay off loans in their general area—you’re correct that the patients’ information isn’t disclosed to the churches, so there is no way for the church to reach out or follow up.

So is this a good idea? We asked an economist, a writer and church coach at the Chalmers Center, and a pastor whose church has participated in the program.

Economist Greg Phelan: Short-Term Good

Clearly, this program has a high “return on investment,” which is great. On the other hand, I agree that the relationship piece is missing. I see that as a tradeoff rather than a dealbreaker.

It can help to think about charity as a portfolio—God’s portfolio, not ours—and we find ways to fit into it. Many ways to give are not “ideal,” checking the boxes of effective ministry, building relationships, and addressing all the causes of poverty. Since we are one part of the whole, much like being parts of one body, we should generally seek to give where we have good opportunities.

We should generally seek to give where we have good opportunities.

Is paying medical debt a short-term band-aid? Perhaps. Although for many, debt relief could have tremendous long-term gains (think the year of Jubilee). But there’s still value in short-term good. My church runs a food pantry, and we hope that relationships develop and people check out our church. Sometimes that happens, but rarely. For some people, the food pantry is probably a band-aid. But it also does tremendous good for people who need it. (Output has doubled during the pandemic.) It’s also a tremendously good witness to our community—many non-churched people point to our food pantry as a great thing that Christians do.

In the same way, even if paying medical debt is merely a short-term good, it still seems like a valuable ministry.

Chalmers Center’s Justin Lonas: Questions to Ask

If churches had a tool like RIP Medical Debt at their disposal as they walked with people in need (whether members of their church or people from the community) through a benevolence process, it could lead to a lot of good. Uncovering and retiring old debts is a huge piece of the long-term, mutually agreed-on action plans that the Chalmers Center encourages in our benevolence ministry model.

With a path to eliminating medical debt so simply available to deacon boards or mercy committees, they could help those they are serving focus their energies on other aspects of the action plan—such as paying off credit card debt, saving for the future, or investing in training/education for a better job—more quickly.

Of course, generosity—especially when its effects are multiplied through a service like this—should be our default mode as Christ followers. But let’s not stop there! Lifting the burden of medical debt is wonderful, but it’s highly unlikely to be the “whole ballgame” for someone struggling with material poverty. We need to be diligent to let our generosity be the first, but never the last, step we take in engaging as a church with neighbors who are wrestling with poverty.

In considering partnership with RIP Medical Debt or other debt-cancellation services, churches should consider asking some questions:

• In what ways could a tool like this fit into our existing, relationship-based benevolence ministry in ways that strengthen the relationships we have with those we are serving?
• Are we taking into account various other factors that also might be contributing to someone’s situation—such as underlying medical conditions, or job insecurity—so that they have a path to avoid falling into future medical debt?
• What kind of application process does RIP Medical Debt have? Are they prioritizing neediest cases and seeking to avoid creating dependency?
• Could we explore other avenues toward building relationships with recipients of support from RIP? For example, could a church apply to be a counseling/care site for RIP clients in their area?

Pastor Adam Mabry: Our Experience

The church I pastor has developed a tradition we call “The Big Give,” where we take up the biggest offering we can a few weeks before Christmas, and give it all away to foreign missions, church planting, and ministries of mercy and justice. About a year ago, we chose to partner with RIP Medical Debt.

Medical debt is not usually the result of unwise decisions, but of unforeseen circumstances. Add to that the labyrinthine nature of the American medical system, and it’s easy to see how someone can end up with a lot of it. It’s a kind of debt that almost entirely affects the sick, elderly, poor, and veterans, but can impact almost anyone.

In the United States, medical debt is sold to collection agencies that aggressively pursue payment. They can report the unpaid bill to credit agencies, get lawyers involved, even seek to garnish your wages or put a lien on your property. This can be a nightmare for anyone, but especially for those on the margins. If that doesn’t seem like a practice that harms the poor and the weak, then I don’t know what is.

So, when a New York Times reporter asked me why we chose to do this, I simply said, “Jesus paid my debt at unbelievable cost to himself, so it probably makes sense for me to pay another person’s debt at some degree of cost to myself.”

Jesus paid my debt at unbelievable cost to himself, so it probably makes sense for me to pay another person’s debt at some degree of cost to myself.

We learned that for every $100 we gave we eliminated $10,000 of medical debt for those in our county. By God’s grace, we paid off millions of dollars in debt for our neighbors.

Now, some of you have an inner voice saying, “Yes, but people should be responsible! They need to steward their money better to avoid debt.” And that’s probably true—most Americans don’t even have $400 in cash saved. But what if instead we thought, “I must be more responsible with my money so I can love my neighbor”? What if we prayed for God to build Spirit-wrought contentment, self-control, and modesty so we could show mercy, love, and a truer Christianity?

Jesus told us to give and it will be given to us—pressed down, shaken together, and running over. What if we gave like we knew, with absolute conviction, that the grace and presence that he would measure out to us would be far more than we could imagine?