Arizona Is Buying Up Its Citizens' Medical Debt

More than 350,000 Arizonans are seeing their medical debt wiped out thanks to a state partnership with the nonprofit Undue Medical Debt, Gov. Katie Hobbs announced this week. Per KNXV, the program, funded with $10 million in federal COVID relief dollars from the American Rescue Plan Act, has so far spent $2 million to erase $429 million in medical debt—translating to over $200 in debt cleared for every dollar spent, according to the nonprofit's Courtney Story.

• "Medical debt deprives our fellow Arizonans of their basic dignity, prevents our families and neighbors from living happy and productive lives, and endangers the Arizona Promise," Hobbs said in a statement, per AZ Family.
• Undue Medical Debt acquires large portfolios of unpaid medical bills from hospitals and collection agencies at steep discounts. The organization then forgives the debt for eligible recipients—people earning less than 400% of the federal poverty level or those whose unpaid medical bills make up at least 5% of their annual income.

• There's no application process required: The nonprofit identifies and buys the debt in bulk, then notifies recipients with a mailed letter. Letters notifying recipients of their erased debt have already started arriving, with more expected in the coming weeks.
• Arizona residents are carrying an estimated $2.4 billion in medical debt, and the initiative aims to buy up to $2 billion of that total. The nonprofit plans to continue rolling out debt cancellations through the end of next year as remaining funds are spent. The Arizona Republic notes that Arizona joins a handful of other states that tried to tackle medical debt relief in 2024, "part of a growing awareness about the vast impact of long-held debt."