Arizona Governor Katie Hobbs just announced something that sounds too good to be true, but it’s completely real for almost half a million people. The state used $10 million in COVID relief money to partner with a nonprofit called Undue Medical Debt, which buys up old medical bills from hospitals and doctors for just pennies on the dollar. By purchasing debt that providers had nearly given up on collecting, they turned that $10 million into a whopping $642 million in medical debt relief for 485,000 Arizona residents. Families who qualified didn’t even have to apply because the program found them by working with credit agencies to identify people whose income was below certain levels or whose medical debt was more than five percent of what they earn each year.
The best part is that when the debt gets wiped out, it completely disappears from credit reports, giving people a fresh start without any tax consequences. Each person who benefited received a letter in the mail explaining that their medical bills had been paid off and their credit was cleared. Other states like Delaware, Connecticut, and Illinois have used this same smart program to help their residents escape crushing medical debt. What makes this work so well is that old medical debt becomes almost worthless to the companies holding it, so they’re willing to sell it for very little money, allowing the program to help far more people than anyone expected.
