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New Orleans City Council working on plan to wipe out unpaid medical bills

One major illness or trauma can be life-changing. And not only to your physical health, but your financial health as well.

NEW ORLEANS — The New Orleans City Council is working on a plan that could wipe out your unpaid medical bills.

This is a plan that will help some people with long-time medical bills they can't pay, and it will help hospitals and doctors with that debt on their books.

One major illness or trauma can be life-changing. And not only to your physical health, but your financial health as well. Four out of 10 adults in the U.S. have medical debt.

When it comes to black adults, 56% have medical debt.

“Medical debt like this can impact your credit. So, if you're looking for housing opportunities, things like that, you're looking to buy a car, it can impact your credit,” New Orleans City Council President Helena Moreno said.

So she is bringing an idea used in cities in Illinois and Ohio to New Orleans.

Thursday, the council will take up using a small part of the federal funds from the American Rescue Plan Act to pay off some of the debt that Orleans Parish patients owe to hospitals and doctors' clinics.

“Just because you get sick, or because you get injured, it shouldn't put you into debt, or cause you to go broke. And so there are many people in the city of  New Orleans who are in that situation,” she explained.

“I have seen people say that they will not go to the doctor because they are scared of the medical bill,” WWL Medical Correspondent Dr. Corey Hébert, who has been in practice for 25 years said.

He says skipping regular checkups actually makes things worse.

“If you don't pay upfront, you will pay exponentially more in the back end. Using this to alleviate medical debt is a great thing,” he said.

It will take several months for the city and nonprofit company to work out the details of who qualifies for medical debt forgiveness.

The debt owed will be bought for pennies on the dollar. So, it's estimated $1.3 million of the funds will cancel about $130 million in medical bills. But what about the question of other pressing needs in the city like crime and police?

“I can tell you that the overwhelming majority of that $75 million is going toward public safety, but that doesn't mean that we can't use these federal funds for other major initiatives to help the City of New Orleans, and $1.3 million out of this first $75 million tranche when we still have another $75 million that we haven't even touched, I think is a wise investment,” Moreno said.

I spoke just a while ago with Ayame Dinkler, CAO of LCMC and its hospitals, who says this is an innovative idea to help people with this burden that impacts their psychological and physical health, for something that is not a luxury item. 

It will help the providers with debt too, but it is unclear if it will help with the charity care costs that hospitals just absorb.

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