By Kate Gonzales

When Gustavo Garcia began looking for ways to alleviate people’s medical debt, his reasons were personal: mom and dad. They’d emigrated from Mexico to the United States in the early 1990s before Garcia’s birth and for as long as he recalled, he’d helped his parents translate and navigate the health care system — from appointments and diagnoses to mounting medical bills for various health issues.

Early this year, after exorbitant medical costs led his parents to plan a move out of the U.S., Garcia began researching ways to help them. The online search revealed that, while he couldn’t buy off his parents’ individual debt, there was potential to help a wider net of people facing the same problem.

On Nov. 4, Global Shapers Sacramento Hub, also known as Sacramento Global Shapers, kicked off Shred the Debt, a crowdfunding campaign to erase millions of dollars in medical debt for more than 2,500 people — at a fraction of the cost. To do this, the local community action group partnered with Undue Medical Debt, a national nonprofit experienced in addressing a uniquely American problem: the debt people take on when they can’t afford medical treatment.

According to this year’s California Health Care Foundation Health Policy Survey, 38% of state residents have medical debt, even as more Californians than ever were insured in 2022.

“We really want to alleviate some of the financial stress that medical debt imposes on our neighbors,” said Garcia, who took up his elected leadership role known as “curator” with Sacramento Global Shapers in July. “We think this is one way to do it.”

Sacramento Global Shapers celebrated its 10-year anniversary in October.  It’s one of about 500 hubs of young, professional volunteers focused on building local solutions within the Global Shapers Community. There are about 15 current members in the local branch, who mostly work in nonprofit and government roles. They choose specific projects they want to take part in or spearhead. In Sacramento, that includes coordinating a mental health support group for Latina mothers and a diaper drive that’s underway. 

The group launched Shred the Debt with a goal to raise $13,900 in four months. If successful, that would eliminate $3.7 million for residents in an eight-county region, including Sacramento, Yolo and Placer counties. Founded a decade ago, Undue Medical Debt has helped more than 9 million Americans through its strategy of buying portfolios of anonymous debt. The recipients are therefore selected randomly and as a group. The organization holds the debt in abeyance for the length of a fundraising campaign and pays it off completely for pennies on the dollar. Garcia said any funds raised beyond their goal will go to debt-relief efforts statewide.

The cost of expensive health care stretches beyond people’s bank accounts. According to researchers with the Peterson-KFF Health System Tracker, which provides data on the quality and cost of health care in the U.S., medical debt is “most pronounced among people who are already struggling with poor health, financial insecurity, or both.” A related survey suggested that people who can’t afford medical bills are more likely to delay or skip medical care, take money out of savings, incur credit card debt or spend less on household items.

“Having medical debt compounds these already existing challenges and creates a barrier to not only accessing necessary health care, but it also prevents access to housing, to job opportunities and general economic mobility and well-being,” said Gretchen James, a member of Sacramento Global Shapers who is working on the initiative.

The issue of medical debt is widespread across the country. Amid this year’s presidential election, nominee and Vice President Kamala Harris announced plans to ease the financial burden on some Americans, including collecting information on the impact of medical debt on older adults and reducing fees for civilian patients at medical treatment facilities. The announcement states that 100 million Americans struggle with medical debt, but precise numbers can be hard to measure.

In June, the Consumer Financial Protection Bureau announced a proposal to eliminate medical debt from some credit reports, stating the practice “unjustly lowers credit scores for 15 million Americans.” In California, a law that goes into effect Jan. 1 would bar the inclusion of medical debt on credit reports.

Based on an analysis of a national survey by the health system tracker, at the end of 2021, Americans owed at least $220 billion in medical debt. In June of that same year, at least $88 billion in outstanding medical bills had been sent to collections, affecting 20% of Americans.

That’s exactly the kind of debt that Undue Medical Debt targets. Those who qualify for no-strings-attached debt relief are households that earn less than four times the federal poverty level, or owe 5% or more of their annual income, and whose debt is in collections. Those helped are anonymous, and $1 in contributions erases $100 or more in debt. 

Once an individual’s debt is erased, they receive a letter with information about the specific campaign that helped them, and a way to reach out if they choose.

“There really are some grand outcomes that come out of the project with effort as simple as donating a few dollars,” James said. “No one should be held back from a healthy, secure future because they sought out medical care.”

This story is part of the Solving Sacramento journalism collaborative. Solving Sacramento is supported by funding from the James Irvine Foundation and the James B. McClatchy Foundation. Our partners include California Groundbreakers, Capital Public Radio, Outword, Russian America Media, Sacramento Business Journal, Sacramento News & Review, Sacramento Observer and Univision 19. Sign up for our monthly newsletter.