Policy- Arizona Gov. Katie Hobbs announced medical debt cancellation for 1 million residents.
- It's the largest-ever state initiative to cancel the debt through a partnership with RIP Medical Debt.
Nearly 1 million Arizona residents will soon see their medical debt balances turn to zero.
On Monday, Arizona Gov. Katie Hobbs announced that, through a partnership with the nonprofit RIP Medical Debt, the state would be canceling medical debt balances for Arizonans using $30 million in American Rescue Plan funds that President Joe Biden allocated to states during the pandemic.
Jeff Smedsrud, a board member of RIP Medical Debt, said during the Monday press conference that Hobbs' action will erase $2 billion in medical debt for Arizonans, which he said is the "largest public-private initiative ever to wipe out medical debt." Impacted Arizonans will soon be notified that their medical bills are erased, Smedsrud said, and their credit scores will be automatically adjusted to reflect the relief.
"This is a win-win that will give so many Arizonans a clean slate and open the doors for a better future," Hobbs said during the press conference.
A February analysis conducted by nonprofit health organization KFF, based on government data, estimated that about 20 million Americans owe at least $220 billion in medical debt, with 14 million people owing over $1,000 in medical debt and about 3 million people owing more than $10,000.
Hobbs joins Connecticut Gov. Ned Lamont, who announced in early February that the state would cancel $650 million in medical debt for about 250,000 residents. And New Jersey Gov. Phil Murphy proposed expanding a medical debt relief program in his latest budget request: "For every dollar invested, we can retire up to $100 in debt — for tens of thousands of people," Murphy said.
According to Hobbs' office, Arizonans earning less than 400% of the federal poverty line or those whose debt is 5% or more of their annual income will qualify for this relief. That equals about $60,000 in annual income for a single person or $124,000 for a family of four.
"I walk into my office every day thinking about how, as governor, I can make life better for Arizonans," she continued. "And so this was an easy decision. Arizonans deserve a break, and they deserve a government that fights for them, helping ensure that medical debt is not going to torpedo their lives."
The relief could be transformational for some Americans. Jim Baker, an Arizonan who spoke during Monday's press conference, said that after being diagnosed with cancer, he could not find a medical plan that would cover his treatment over time, so he had to start putting his healthcare expenses on his credit card — and his medical debt began to accumulate.
The medical debt "makes me feel less than," Baker said.
"I've gone from being a contributing member of the community and always feel that I paid my way to not being able to pay my way and having to ask for help. To have that debt forgiven would just be a blessing that I can't imagine," he continued. "I'm thankful to be alive every day. I'm grateful for the medical care that I received, for the community of doctors and healthcare practitioners in Phoenix. But in that, the only thing I'm left with is the endless process of being in debt."
Are you struggling to pay off medical debt? Have your medical debts been cancelled? Share your story with this reporter at asheffey@businessinsider.com.