With the help of one of America’s most heroic charities, Arizona’s governor has helped eliminate $429 million in privately-held medical debt and hospital bills in the state.
352,000 Arizonans received a letter in the mail explaining how their debts had been paid off for pennies on the dollar—one can only imagine the relief.
Taking money apportioned for community healthcare in the American Rescue Plan Act passed during the COVID-19 pandemic, Governor Katie Hobbs then gave it to Undue Medical Debt, an organization that has zeroed out tens of billions in debt for millions of Americans.
Identifying Arizona debtors that owed 5% or more of their annual income in medical bills, or those who held medical debt while making up to or below 400% of the national poverty line, the partnership should cut outstanding medical debt in the state by around 25%.
“This investment demonstrates Arizona’s commitment to ensuring that no one should face financial ruin for seeking care, and we’re grateful to work with providers across the state who recognize that removing these unpayable debts of necessity helps their communities thrive,” said Allison Sesso, president and CEO of Undue Medical Debt.
“This particular contract, we’re going to be spending $10 million of money that would be a lot harder to raise in only private dollars, but we pair that with private donations across the United States,” Sesso told AZ Family.
But how can $429 million in debt be eliminated for just $10 million? The first fact on the surface of this remarkable bargain is that the cost of care and procedure to the patient is often not reflective of the costs to the hospital for providing it.
Yet saddled with a massive bill in the event of an unforeseen sickness or accident, hospital patients often can’t or won’t pay for years at a time. A hospital may have a claim on someone’s money worth $50,000, or even $100,000, but if they can’t pay it in anything other than tiny installments, it suddenly begins to look quite worthless to a hospital administrator.
The hospital could take legal action, but there’s no guarantee they would collect, and it’s expensive to pay the legal fees resulting. So Undue Medical Debt comes into the picture and offers $5,000 in immediate cash payments to take that claim off their hands—essentially buying the debt for pennies on the dollar.
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GNN has previously reported that the subtle brilliance in the act of buying outstanding debt from hospitals is that it’s up to the hospital’s accounting department to assess whose debts are available for Undue Medical Debt to buy.
This gives the charity a true randomness that prevents natural biases or preferences; the letters arrive into the hands of strangers, reporting the good news that they now debt-free, as if they’d won the lottery or been subject to divine intervention.
MORE OF THIS GOOD WORK: Maine Nonprofit Cancels $1.9 Million in Medical Debt for 1,500 People
Rochelle Jordan is just one Arizonan who was relieved of a debt burden by Undue Medical Debt and Governor Hobbs. Doing what she felt was the responsible thing and calling an ambulance years ago when she felt very sick in town, she arrived at the hospital, received treatment, and received a bill for upwards of $3,000 for the ambulance ride.
“I didn’t know catching the ambulance will cost me so much,” Jordan expressed to AZ Family.
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