Governor Phil Murphy announced that nearly 50,000 people in New Jersey will have $100 million in medical debt erased. This move marks one of the most extensive state-led efforts to provide direct relief to residents struggling with medical bills.
Governor Murphy allocated $550,000 from federal American Rescue Plan funds and partnered with the nonprofit organisation Undue Medical Debt, which buys unpaid medical bills from hospitals at a discount, to carry out this debt relief programme. Eligible New Jersey residents have started receiving letters informing them of the debt cancellation.
According to a press release from the governor’s office, those eligible for relief are individuals whose income is at least four times below the federal poverty level or who have medical debt equaling 5% or more of their annual income.
Governor Murphy emphasised the significance of this initiative, stating, “Medical debt accumulates very quickly and can follow a person for decades. We are wiping the slate clean for thousands of New Jersey families, eliminating their debt, and making a real, tangible impact on their lives.”
The relief will benefit 17,905 people who owed $61.6 million to Prime Healthcare hospitals and 31,748 people who owed about $38.4 million to collection agencies and other debt holders. Undue Medical Debt has partnered with local governments since 2022 to help eliminate medical debt.
Other states, including Arizona, Indiana, and New York City, have announced similar programs this year that could erase between $1 billion and $2 billion in medical debt with Undue’s assistance.
According to a July White House statement, governments nationwide have utilised funds from the American Rescue Plan, the $1.9 trillion coronavirus relief bill signed in 2021, to eliminate an estimated $7 billion in medical debt for nearly 3 million Americans.
Some states are exploring other ways to relieve medical debt. For instance, North Carolina recently received approval from the Biden administration to incentivise hospitals to forgive the debt of about 2 million residents in exchange for increased Medicaid funding.