A plan to alleviate medical debt for some Pittsburgh residents received approval Tuesday from City Council.

The city will use $1 million in federal American Rescue Plan Act money to contract with a company that will buy dischargeable health care debt from hospitals and forgive the debt of tens of thousands of city residents.

City Councilman Bobby Wilson, D-North Side, introduced the measure last year. He said Tuesday that it will help Pittsburghers who qualify improve their credit scores, pay their bills and buy homes.

He has projected that the bill could forgive about $115 million in health care debt owed by about 24,000 city residents.

Council selected New York-based nonprofit RIP Medical Debt to run the city’s health care debt-relief program. The company has partnered with other cities to use covid relief funding to relieve medical debt for residents.

Wilson said medical debt is the number one reason Americans file bankruptcy.

“This was a big statement being made in terms of rebuilding communities, not just a way to rebuild communities, but people in the community,” Wilson said.

The legislation said 7% of Allegheny County households have health care debt in collections. The issue has also become a sticking point in labor fights for workers at local hospitals.

Councilman Anthony Coghill, D-Beechview, said he initially expressed some reluctance about using RIP Medical Debt, but became supportive of the company after watching a news program that featured the nonprofit.

He said he supports the city’s $1 million allocation, but thinks in the future that the local foundation community should be providing the funding, not the city.

Residents will not apply for debt relief. RIP Medical Debt will seek out residents whose debts apply.

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