Arizona Governor Katie Hobbs has announced the cancellation of $429 million in medical debt for more than 352,000 residents, one of the largest state-led initiatives of its kind in the United States (AZFamily). This program is part of a partnership with the nonprofit organization Undue Medical Debt, which specializes in purchasing and forgiving medical debts from collection agencies and hospitals (Undue Medical Debt).
Medical debt has long been a pressing issue in the United States. According to recent studies, tens of millions of Americans carry unpaid medical bills, with some estimates suggesting total national medical debt exceeds $81 billion. Such debt can result in wage garnishments, damaged credit scores, and delayed care, creating long-term financial and health consequences. Arizona’s program is designed to provide immediate relief and financial stability to residents facing these challenges (Kaiser Family Foundation).
The initiative was made possible through a combination of state COVID-19 relief funds and philanthropic support. Undue Medical Debt purchases debt for a fraction of its original value—often pennies on the dollar—then cancels it entirely. This allows a relatively modest financial investment to yield massive results. In Arizona’s case, a $10 million allocation facilitated the cancellation of $429 million in debt, demonstrating the cost-effectiveness of this approach (AZFamily).
Governor Hobbs highlighted the importance of the initiative, stating that medical debt undermines financial security and dignity. “No one should face financial ruin simply for seeking healthcare,” she said, emphasizing that the program aligns with Arizona’s broader commitment to protecting residents through initiatives like the Arizona Promise, which aims to improve access to essential services and support vulnerable populations (Office of Governor Hobbs).
Eligible residents are automatically notified through letters sent by Undue Medical Debt, meaning individuals do not need to apply. The letters confirm that their debts have been forgiven, ensuring the process is confidential, streamlined, and efficient. This anonymous notification protects privacy while providing immediate relief (AZFamily).
Beyond immediate relief, this program has broader economic and social benefits. Eliminating medical debt can improve credit scores, enabling residents to secure loans for education, housing, or entrepreneurship. It can also reduce stress-related health issues and improve overall financial well-being. By providing relief at this scale, Arizona is creating a model for other states considering medical debt forgiveness programs. Similar initiatives in California, Maryland, and Washington D.C. have demonstrated positive outcomes, proving that state-level debt cancellation can have tangible social and economic impacts (Consumer Financial Protection Bureau).
With an estimated $2.4 billion in outstanding medical debt across Arizona, the $429 million canceled represents a substantial first step, but underscores the ongoing need for systemic solutions. Experts suggest that combining debt forgiveness with healthcare policy reforms, including expanded coverage and cost transparency, could further reduce the prevalence of medical debt nationwide (Commonwealth Fund).
Arizona’s program also highlights the potential of public-private partnerships in addressing complex social problems. By leveraging nonprofit expertise and philanthropic funding alongside state resources, the initiative ensures sustainable impact and accountability. For the residents affected, the cancellation of $429 million in medical debt is more than a financial reprieve—it is a restoration of dignity, opportunity, and hope for a more secure future.