Arizona Initiative Erases Medical Debt for Hundreds of Thousands
In a significant move to alleviate financial burdens, over $200 million in medical debt has been eliminated for Arizona residents, thanks to a state initiative backed by Gov. Katie Hobbs. This follows a broader effort that has seen a total of $642 million in medical debt forgiven for more than 485,000 individuals across the state.
Allison Sasso, the president and CEO of Undue Medical Debt, revealed the latest figures on Monday. Earlier this year, the company agreed to use $10 million from state American Rescue Plan COVID relief funds to purchase medical debt from healthcare providers, essentially erasing these debts for a fraction of their original value. The program also ensures that recipients of this debt relief receive letters acknowledging the governor’s role alongside Undue Medical.
Undue Medical Debt, established in 2014, operates nationwide by acquiring portfolios of medical debt using public and private funds. The organization leverages the willingness of debt holders to sell these debts cheaply, allowing more significant amounts of debt to be eradicated. This particular program targets individuals with incomes below 400% of the federal poverty level, which is currently $128,600 for a family of four, or those whose medical debt is 5% or more of their annual income.
The process involves acquiring “relevant income data” from a credit reporting agency to identify individuals with outstanding medical debt. This information is cross-referenced with data from medical providers to determine eligible participants. Once debts are cleared, individuals receive confirmation via a letter from Undue Medical, highlighting the governor’s contribution to the initiative.
Gov. Hobbs has emphasized the importance of transparency in the program, requiring that all communications about the debt relief include acknowledgment of the governor’s office. A spokesperson for the governor stated, “The medical debt relief would not be possible without the governor’s leadership and focus on lowering costs and delivering economic opportunity for every Arizonan.”
In addition to state efforts, Gov. Hobbs is pursuing $1 billion in new federal aid to bolster rural healthcare, amid concerns over potential reductions in federal Medicaid funding.
Regarding the legality of using federal COVID relief funds to pay down private debts, Gov. Hobbs assured that their actions are compliant with state laws. She noted that Arizona is not alone in employing this strategy, referencing similar programs in other states and local governments, such as Delaware, Connecticut, Illinois, and Los Angeles County.
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