The State of Government-Led Medical Debt Cancellation Efforts

With two in every five adults behind on medical bills that collectively total more than $220 billion, soaring medical debt is a national crisis that disproportionately burdens low-income people and communities of color. Recognizing the negative impacts of medical debt on health and financial security, Cook County, Illinois allocated $12 million of its American Rescue Plan Act (ARPA) recovery funds in July 2022 to eliminate up to $1 billion in medical debt. Toledo, Ohio quickly followed suit, launching a policy trend that now spans the country from California to Florida.

There are currently 26 active government-led medical debt cancellation efforts 

Since July 2022, 26 state and local governments have dedicated public funds to medical debt relief programs that are in various stages of implementation. Advocacy by community organizations and coalitions, as well as medical students and doctors, has been an important driver of these innovative efforts in addition to policy leadership by elected officials. These policy entrepreneurs are often younger electeds and electeds of color who represent communities struggling with medical debt, some of whom have had their own experiences with medical debt.

Three midwestern states—Ohio, Michigan, and Illinois—have the highest density of efforts. Ohio cities and counties are at the forefront of the debt cancellation movement: Akron, Cincinnati, Cleveland, Columbus, Oberlin, and Toledo/Lucas County combined are all implementing medical debt relief. Michigan follows, with Ingham, Kalamazoo, Oakland, and Wayne counties all partnering with the state of Michigan to implement medical debt cancellation programs. Cook County’s national leadership inspired the state of Illinois to launch an effort. All of the other state and local efforts are the sole initiatives in their states.

Connecticut was the first state to launch a medical debt relief initiative in June 2023, followed by Michigan, Arizona, New Jersey, North Carolina, Illinois, and, most recently, Rhode Island in October 2024. Pennsylvania nearly launched a program. Representative Arvind Venkat, who is also a practicing emergency room physician, advocated for a medical debt relief program that Governor Josh Shapiro then sought to include in the 2025 budget, but the program was ultimately cut from the budget. 

Two cities—St. Louis and Barberton, Ohio—allocated funds to medical debt relief programs but decided not to move forward due to concerns that they may not spend all the ARPA funds before the deadline of December 31, 2026.

These programs promise to deliver $15.6 billion in debt relief to more than 6 million low and moderate-income residents burdened by medical debt

One of the reasons that medical debt relief programs have taken off is the scale at which they can deliver impact: on average, every dollar in public investment translates into more than $100 in debt relief. Collectively, these efforts estimate they will relieve $15.6 billion in medical debt for more than 6 million low and moderate-income residents by the end of 2026. North Carolina’s unique medical debt relief incentive program is the farthest-reaching—expecting to reach 2 million residents and clear $4 billion in debt. New York City’s initiative anticipates serving 2 million residents and eliminating $2 billion in debt. New Jersey, Illinois, and Cook County all expect to relieve at least $1 billion worth of medical debt. Even the smallest-scale programs plan to reach tens of thousands of residents and cancel millions in debt.

ARPA has provided the bulk of funds for these programs, but a growing number of places are allocating other public funds toward medical debt relief

The total amount of public funds dedicated to medical debt relief programs to date is $120.7 million, with the amount of public funding ranging from $24,000 in Oberlin, Ohio (which has a population of less than 8,000) to $30 million in Arizona. Of the 26 efforts, 18 of them used ARPA funds totaling $88 million. Wayne County, Michigan also added general funds to its ARPA funding allocated to medical debt relief. Toledo’s effort was jointly funded by the City’s ARPA funds and Lucas County’s general funds, and Kalamazoo County’s effort was jointly funded by the County’s ARPA funds and the City’s ARPA funds. The other places are funding their initiatives through their regular budgets.

To date, medical debt cancellation programs have followed a similar template, with all but one partnering with Undue Medical Debt to implement debt cancellation

With one exception, all of the government-led medical debt cancellation efforts are being implemented in partnership with the nonprofit Undue Medical Debt, formerly known as RIP Medical Debt. Founded in 2014 by two former debt collection executives , Undue Medical Debt negotiates with hospital systems to purchase large bundles of medical debt and then erase the accounts with no tax consequences to recipients. 

The programs follow Undue Medical Debt’s program design, which includes three key elements:  

1. Financial hardship eligibility criteria. To include low and moderate-income people affected by medical debt, households with incomes at or below 400 percent of the current Federal Poverty Guidelines or with medical debts that are 5 percent or more of their household income are eligible for debt relief.
2. Universal eligibility, with no application or selection process. Once a partnership is established with a hospital system, all of the patients meeting the hardship criteria have their debts abolished. They are notified by letter that their debts have been acquired and erased.
3. Unconditionality of relief. The debts are abolished with no strings attached and no tax burdens for those whose debt is relieved.

Columbus, Ohio initially expected to work with Undue Medical Debt, but ended up working directly with the Central Ohio Hospital Council, which includes all four of the City’s hospital systems, to administer a medical debt cancellation program that absolved $335 million in medical debts held by 340,660 households—reaching a third of the City’s population (see our case study). Columbus contributed $500,000 in ARPA funds for administrative expenses and the hospitals took no compensation. Despite not formally partnering with Undue Medical Debt, the organization advised Columbus and the City followed Undue’s program blueprint.

Two places set slightly lower income thresholds for debt relief eligibility: North Carolina’s debt relief program sets eligibility at 350 percent of the Federal Poverty Line (FPL) and Pittsburgh’s program sets eligibility at 200 percent of the FPL.

These programs have already delivered over $1.5 billion in debt relief to more than a million residents 

Eight of the 26 medical debt relief programs have brokered agreements with hospitals to cancel medical debts thus far. Collectively, these programs have provided over $1.5 billion in debt relief, benefiting more than a million residents. Only Columbus’s program has been completed; Cleveland, Connecticut, Cook County, Illinois, New Orleans, Toledo/Lucas County, New Jersey, and Washington D.C. all expect to roll out additional debt relief. 

The pioneer program in Cook County has provided the largest amount of debt relief to date ($382 million), while Columbus’s unique hospital collaboration reached the most residents (340,660). Testimonials from residents whose debts have been abolished demonstrate the positive impact of these programs.

One important benefit of partnering with Undue Medical Debt is that as a charity seeking maximum human impacts, the organization can leverage its own funding to clear debts within each hospital’s entire patient portfolio, regardless of where those patients live (and unconstrained by ARPA’s requirements to benefit residents of the jurisdiction granted the funds). In Toledo and Lucas County, for example, the program established two healthcare system partnerships that cleared the debts of 41,000 city and county residents, and also about 72,000 patients of those hospitals who live in other parts of the Toledo metropolitan area.

Leading local and state governments are using debt cancellation as a launchpad for broader efforts to improve physical and financial health

Eliminating medical debt provides immediate relief for economically insecure families—reducing stress, increasing financial stability, and improving access to healthcare, but cancelling debt does not prevent residents from accumulating new medical debt. More systemic changes are needed to address the root causes of medical debt and improve residents’ physical and financial health. Many of the governments that are cancelling medical debt acknowledge this reality and see their efforts as catalysts for larger-scale policy change efforts.

North Carolina, which has the third highest medical debt among all 50 states, recently launched a first-of-its-kind medical debt initiative that provides hospitals with enhanced Medicaid payments in exchange for their adoption of a series of debt mitigation policies. In addition to wiping out the debts of lower-income patients, the hospitals must provide patients with incomes below 300 percent of the FPL with 50 to 100 percent discounts on medical care, automatically enroll low-income people into financial assistance, cap interest rates on medical debt, and prohibit selling debt to collectors. All 99 of the state’s hospitals have signed on to participate in the program, with the discounts and automatic enrollment required by January 2025 and the debt relief and consumer protections required by July 2025. The North Carolina Department of Health and Human Services released a toolkit to support other states interested in similar policies.

Along with North Carolina, Connecticut, Illinois, New Jersey, and Rhode Island have also banned hospitals from reporting medical debt to credit agencies in addition to launching medical debt relief programs. 

Among local governments, Los Angeles County is undertaking the most comprehensive medical debt program. In addition to a $5 million investment to cancel medical debt, the County is working on greater transparency by requiring hospitals to regularly report data on their financial assistance and debt collection operations to the Department of Public Health, as well as identifying additional best practices and policies to reduce medical debt. The initiative is grounded in a baseline research report on the state of medical debt in the County and advocacy by a multisector medical debt coalition. 

New York City also stands out for establishing a new Office of Healthcare Accountability to analyze healthcare costs for City employees, publish information about hospital costs on its website, and make recommendations regarding healthcare and hospital costs. 

Cincinnati’s medical debt relief program emerged from the City’s search for solutions to the racial wealth gap, and in implementing the program, Cincinnati seeks to link medical debt recipients with wraparound services to support their financial health.

Since Cook County pioneered a medical debt relief initiative, many local and state governments have followed suit. These initiatives are removing the burden of debt and delivering meaningful relief to hundreds of thousands of economically insecure residents, building momentum for broader-scale changes to stem medical debt in the first place. Sparked by ARPA funds, localities are also allocating their regular budgets toward medical debt relief—illustrating how this movement can continue to build momentum as ARPA spending winds down. The examples of North Carolina and Los Angeles County also reveal how state and local governments can innovate comprehensive strategies to address medical debt. In the face of mounting medical debt and the broader affordable health care crisis—both of which have far-reaching consequences for health and economic stability—communities have a unique and urgent opportunity to build on this momentum and tackle these challenges at their root.