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The Burden of Medical Debt and the Impact of Debt Forgiveness

Last registered on June 17, 2019
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Pre-Trial

Trial Information

General Information

Title
The Burden of Medical Debt and the Impact of Debt Forgiveness
RCT ID
AEARCTR-0003332
Initial registration date
September 18, 2018

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
September 21, 2018, 12:09 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
June 17, 2019, 2:48 PM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
United States of America
Region

Primary Investigator

Name
Neale Mahoney
Affiliation
Stanford University
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Other Primary Investigator(s)

PI Name
Raymond Kluender
PI Affiliation
Massachusetts Institute of Technology
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PI Name
Francis Wong
PI Affiliation
University of California Berkeley
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PI Name
Wesley Yin
PI Affiliation
University of California Los Angeles
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Additional Trial Information

Status
In development
Start date
2018-03-09
End date
2020-07-01
Keywords
Finance & Microfinance, Health
Additional Keywords
Medical debt, debt forgiveness, debt traps
JEL code(s)
D14, D18, I1
Secondary IDs
Abstract
Medical debt is potentially a large burden for many Americans -- with 44 million individuals holding an aggregate $75 billion in medical debt. While these nominal amounts are staggering, it is unclear to what extent medical debt harms financial well-being. Medical debt recovery rates are low, suggesting that the pure “balance sheet” cost of medical debt is modest for most individuals. Yet medical debt may harm individuals through lower credit scores, higher interest rates, and reduced access to credit -- impairing economic opportunities and perhaps even locking individuals in “debt traps.” Collaborating with RIP Medical Debt, a non-profit that buys and abolishes medical debt, we will implement a randomized-control trial (RCT) to study the impact of medical debt. Medical debt will be forgiven for randomly chosen “treated” individuals, while collections efforts will proceed as normal for “control” individuals. Outcomes will be measured using credit bureau data.
External Link(s)

Registration Citation

Citation
Kluender, Raymond et al. 2019. "The Burden of Medical Debt and the Impact of Debt Forgiveness." AEA RCT Registry. June 17. https://doi.org/10.1257/rct.3332-3.0
Former Citation
Kluender, Raymond et al. 2019. "The Burden of Medical Debt and the Impact of Debt Forgiveness." AEA RCT Registry. June 17. https://www.socialscienceregistry.org/trials/3332/history/48276
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
For treated individuals, RIP Medical Debt will purchase all observed medical debt in collections held by First Financial Asset Management (FFAM), and then retire that debt from collections. We will mail subjects letters informing them of the source and dollar amount of medical debt that was abolished.
Intervention Start Date
2018-03-09
Intervention End Date
2019-07-01

Primary Outcomes

Primary Outcomes (end points)
Number of accounts past due
Primary Outcomes (explanation)
Definition: Count of tradelines with payments 30+ days past due

Secondary Outcomes

Secondary Outcomes (end points)
1. Collections domain (“first stage”)

a. Number of debts in collection
Definition: Count of collections items

b. Amount of debt in collections
Definition: Sum of debt in collections

2. Non-medical financial distress domain

a. Number of accounts in default
Definition: Count of (non-medical) tradelines with payments 90+ days past due

b. Account balances past due
Definition: Sum of account balances for (non-medical) tradelines with payments 30+ days past due

c. Account balances in default
Definition: Sum of account balances for (non-medical) tradelines with payments 90+ days past due

3. Public records domain

a. Chapter 7 bankruptcy in last 12 months
Definition: Indicator for Chapter 7 filing in last 12 months

b. Chapter 13 bankruptcy in last 12 months
Definition: Indicator for Chapter 13 filing in last 12 months

c. Bankruptcy in last 12 months (aggregate measure)
Definition: Indicator for bankruptcy filing in last 12 months

4. Credit supply domain

a. Credit score (conditional on having one)
Definition: Vantage Score (or if not available most widely used credit score available)

b. Credit score indicator
Definition: Indicator for having credit score used in 4a

c. Credit limits
Definition: Sum of credit limits across credit cards


5. Borrowing domain

a. Number of credit cards
Definition: Number of credit card accounts

b. Number of mortgages
Definition: Number of mortgages

c. Number of auto loans
Definition: Number of auto loans

d. Credit card balances
Definition: Sum of credit card balances

e. Mortgage balances
Definition: Sum of mortgage balances

f. Auto loan balances
Definition: Sum of auto loan balances

g. Number of loans (aggregate measure)
Definition: Number of loan accounts

h. Total balances (aggregate measure)
Definition: Sum of balances on all loan accounts
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We are conducting a randomized-controlled trial (RCT) to estimate the impact of medical debt forgiveness on measures of financial well-being. Individuals are randomly assigned to one of two arms:

Control: No contact is made with debtors, and no action is taken on medical debt, by researchers; ongoing collections, to the extent that they occur, proceed as normal. The control arm captures status quo interactions with debt collections.

Treatment: For these subjects, RIP Medical Debt will purchase all observed medical debt in collections held by First Financial Asset Management (FFAM), and then retire that debt from collections. We will mail subjects letters informing them of the source and dollar amount of medical debt that was abolished.

Experimental Design Details
Randomization Method
Randomization done by a computer
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Debt purchases are ongoing. Final sample size will be determined based on available funding to purchase debt.
Sample size: planned number of observations
Debt purchases are ongoing. Final sample size will be determined based on available funding to purchase debt.
Sample size (or number of clusters) by treatment arms
Debt purchases are ongoing. Final sample size will be determined based on available funding to purchase debt.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials