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.
Having health insurance didn’t protect them. Some focus group participants thought they had “good” health coverage when they incurred their medical debt while others were uninsured. They agree having health coverage does not protect you from big bills or medical debt. They believe hospitals (most Atlanta-area hospitals were mentioned), providers, and insurance companies find loopholes in order to send large and unexpected medical bills to people.
Those who had debt abolished by RIP Medical Debt say it was extremely helpful. They are grateful and say it made a difference. It relieved the constant pressure of their debts. Some also sought health care services once their debt was paid – care they had been putting off – because they felt less vulnerable. And at least two Atlanta residents said having their medical debt abolished was a catalyst to paying down other debts – they could see the light at the end of the tunnel.
Debt creates more debt. Going into medical debt means they start falling behind in other areas too. Some go into credit card debt to pay off medical bills. Others miss car payments or ignore student loans. Medical bills and debt can cause a larger financial spiral. Some see their credit affected which has knock-on effects that impact their ability to move to a better neighborhood, get approved for loans, etc.
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.
Thank you for the welcome and your insight! I did find this specific focus group report conducted by RIP Medical Debt that you may find of interest. https://ripmedicaldebt.org/wp-content/uploads/2022/08/Focus_Group_Report_August.pdf
Key Takeaways:
Having health insurance didn’t protect them. Some focus group participants thought they had “good” health coverage when they incurred their medical debt while others were uninsured. They agree having health coverage does not protect you from big bills or medical debt. They believe hospitals (most Atlanta-area hospitals were mentioned), providers, and insurance companies find loopholes in order to send large and unexpected medical bills to people.
Those who had debt abolished by RIP Medical Debt say it was extremely helpful. They are grateful and say it made a difference. It relieved the constant pressure of their debts. Some also sought health care services once their debt was paid – care they had been putting off – because they felt less vulnerable. And at least two Atlanta residents said having their medical debt abolished was a catalyst to paying down other debts – they could see the light at the end of the tunnel.
Debt creates more debt. Going into medical debt means they start falling behind in other areas too. Some go into credit card debt to pay off medical bills. Others miss car payments or ignore student loans. Medical bills and debt can cause a larger financial spiral. Some see their credit affected which has knock-on effects that impact their ability to move to a better neighborhood, get approved for loans, etc.