RIP Medical Debt

Medical debt is the leading cause of bankruptcy in America

I don't believe this is true. Some sources that claim by pointing out that on over half of bankruptcy proceedings involve medical debt, but that doesn't mean the medical debt was the problem - in bankruptcy you discharge essentially all the debts you have, including smaller ones that were not really the cause of the bankruptcy. Do you have any sources in mind that medical debt is actually the main driver here?

over 100 million Americans struggle with medical debt

I also don't believe this. In fact I think it is contradicted by one of your links, which says:

Approximately one hundred million people in the United States, or 41 percent of all US adults, currently have healthcare/medical debt, according to a national survey report by the Kaiser Family Foundation ... Fifty-nine percent of those polled said they expected they could pay off their medical debt in two years or less.

Since many people have debt but don't struggle with it, the number who struggle is presumably considerably less than 100 million. 

EDIT: Other commenters have pointed out reasons why the elimination of debt sold really cheap is unlikely to affect much the lives of recipients. Still, if the debt relieved did in fact significantly help the beneficiaries, it could turn out to be very effective. However, we won't know until RIP releases recipient outcomes data.

TL;DR: About as cost-effective as GiveWells's top charities, IF my assumption about outcomes is broadly right. $14.16 to provide debt relief to one person. If one assumes a lifespan increase of 0.2% (less than two months) as the effect (by preventing healthcare avoidance), it comes out to $7080 per death-equivalent-in-lifespan averted. I recommend looking further into it, particularly with respect to outcomes.

Hi Layla, welcome to the Forum! Thanks for posting!

This looks like an interesting opportunity. Within the cause area of health in the US, RIP seems to have chosen a big and tractable problem, and to be triaging their beneficiaries according to the relevant metrics.

Here is my attempt to have a rough idea about RIP's cost-effectiveness.

RIP claims that it has "helped 5,492,948 individuals and families" and has relieved $8,520,147,644 of medical debt. The average debt relieved per recipient is thus $8,520,147,644 / 5,492,948 = $1551. If, as you say, "every $100 donated clears $10,000 in medical debt", then the cost per recipient is $15.51 (!!!).

I was initially skeptical of this calculation, but it checks out. In its 2021 year end report, RIP says that it relieved debt to 1,312,697 people during the year, and in its 2021 financial statement declares total expenses of $18,587,272. So the cost per recipient is $18,587,272 / 1,312,697 = $14.16.

It's hard to estimate the benefit from medical debt reduction. Let's say, for the sake of simplicity, that the avoidance of medical treatment and mental health problems derived from struggling with medical debt make people live 0.2% shorter lives (1.92 months if starting out with an 80-year lifespan), and that the debt relief provided eliminates that effect. It follows that preventing 0.002 death-equivalents costs $14.16, and thus preventing one death-equivalent unit of lifespan reduction costs $7080. This is about as cost-effective as GiveWell's most recommended charities.

This would be huge if true. However, my priors advise me against getting too hopeful. It should be hard to find a charity about as cost-effective as GiveWell's top charities. RIP has been assessed by Charity Navigator, and does a fair bit of marketing. It would be weird if no EA had picked this up before. I have reason to believe that I am overestimating the positive effects of debt relief.

To find out whether RIP is really so effective, it would be great to have numbers on the welfare outcomes of debt relief. I found this report on RIP's site, which while a potentially useful qualitative source, makes no effort to quantify outcomes.

Prior discussion of this organization here: https://forum.effectivealtruism.org/posts/FiJZduXnddAGSveAC/mackenzie-scott-s-grantmaking-data

One problem here, as I see it, is that there is a significant difference between the mean adverse effects of all medical debt and the mean adverse effects of the types of medical debt that a debtholder is willing to sell for about a penny on the dollar:

• For instance, presumably no one would sell debt on which they thought they could collect -- e.g., by wage garnishment -- at that price. Thus, it's unlikely (e.g.) that debt of that type is a materially contributing factor toward bankruptcy for bankruptcy filers. Anyone who files bankruptcy over a debt that is known to be practically uncollectable up to the expiration of the statute of limitations probably needs a better bankruptcy attorney first and foremost. 
• Also, most debt that can be bought so cheaply is old enough that it's less likely to be a significant factor in disrupting a provider-patient relationship. E.g., If the provider was going to fire the patient for non-payment, or the patient was going to terminate the relationship due to shame about owing the debt, it likely would have happened prior to that point.