Pittsburgh City Council has advanced a proposal to use $1 million in covid-relief funding to alleviate residents’ medical debts.

Councilman Bobby Wilson introduced the proposal last month and suggested that the city hire RIP Medical Debt, a New York-based nonprofit, to buy dischargeable health care debt directly from hospitals and then forgive it.

Wilson on Wednesday amended the bill to allow city officials to issue a request for proposals from any qualified company that may be able to partner with the city.

When Wilson announced the proposal, he said the arrangement could forgive about $115 million in health care debt owed by about 24,000 residents in the city.

More than 100 million Americans — or about 41% of adults — have health care debt, according to the legislation. It’s the most common type of debt in the nation, Wilson said, and the leading cause of personal bankruptcy.

In Allegheny County, 7% of households have health care debt in collections, according to the legislation.

The proposal would allow the city to partner with a company that would alleviate health care debt for residents who received health care on or after March 30, 2020.

The initial proposal included a requirement that people who take advantage of the program have a household income of no more than four times the federal poverty level, but Wilson on Wednesday proposed to change that to three times the federal poverty level, based on recommendations from the city’s law department.

Eligible account balances must have been written off as bad debt, and hospitals must consider the accounts to be dormant. Beneficiaries will not have to pay taxes on the discharge of their debt.

The measure would be funded using $1 million of the $335 million that the city received from the American Rescue Plan Act, a $1.9 trillion economic stimulus bill.

Council members debated whether to use a portion of the city’s ARPA money for the proposed initiative during budget hearings last month. In allocating $1 million for the medical debt relief program, City Council took the last $1 million that had been earmarked for an LED streetlight project. The streetlight project repeatedly had money pulled from it to fund other initiatives.

Cook County, Ill., used $12 million in ARPA funding to forgive up to $1 billion in health care debt for its residents. Toledo partnered with Lucas County, Ohio, to use $1.6 million in ARPA money to discharge about $200 million in medical debt for about 41,000 people there. Both places contracted with RIP Medical Debt.

Council is expected to vote on the legislation next week.

If the program is approved, the city will begin the process of requesting proposals from qualified vendors. Once city officials select a company, the final contract will go before City Council for final approval.

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