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Undue Medical Debt outlines debt‑abolition model and partnership terms for Austin
Summary
Undue Medical Debt, a national nonprofit, briefed the committee on a model that purchases and abolishes medical debt for eligible residents. The group described program prerequisites, contract terms and examples from other U.S. jurisdictions and noted limits on targeting and the need for multi-year city or philanthropic commitments.
Undue Medical Debt presented to the City Council Public Health Committee on June 4, describing its national model to purchase and abolish medical debt and options for a potential city partnership.
Courtney Storey, vice president of government initiatives, said the nonprofit combines philanthropic donations and government contracts to buy accounts in collections and remove balances for eligible residents. “Our government work alone has abolished almost $4,500,000,000 in debt for over 3,500,000 individuals,” Storey said.
Undue staff said Texas has among the highest average medical-debt burdens in the nation and that the average medical-debt balance for a Travis County resident is about $1,350 (figure presented as an estimate). The organization explained typical eligibility criteria they require for government partnerships: household income at or below 400% of the federal poverty level or medical debt exceeding 5% of income, residency within the jurisdiction providing funds (ZIP‑code restrictions), and that the organization cannot target relief by diagnosis, immigration status or specific provider without provider consent.
The group described a typical contract model: government funding used to purchase qualifying accounts from local hospitals or collections portfolios, with an example cost-efficiency cited by presenters of roughly $1 of government funding abolishing $167 of medical debt in prior projects. Undue said contracts typically run at least three years to allow time to identify, purchase and process files, send notice to affected residents and complete remittance and reporting steps. They said indirect administrative costs typically run at a 15% rate across their government contracts.
Storey and a local policy analyst, Lindsay (last name not specified during the briefing), showed examples of recent government partnerships—San Antonio, Cook County and other jurisdictions—and said selecting files can require negotiations with hospital partners. Undue emphasized it does not disclose hospital or provider names without permission and that program success is easier when governments engage hospitals early in the process.
Committee members asked about the practical effect on people who have debt: Undue said relief reduces psychological burden and can increase reengagement with care. Members also asked about return on investment and cross-sector impacts; Undue acknowledged research is emerging and that part of the value of government partnerships is the opportunity to open upstream conversations with hospitals and policymakers about preventing medical debt.
Undue staff offered to work with city staff to size the market, estimate eligible debt held by local providers, and prepare a contract budget aligned to the city’s available funds and goals.
