Los Angeles County has wiped out $63 million in medical debt for tens of thousands of low-income residents, partnering with the nonprofit RIP Medical Debt to purchase and abolish past-due hospital bills at a fraction of their face value. The move offers financial breathing room to people who had little hope of ever paying off what they owed — and signals a growing movement among local governments to treat medical debt as a public health issue, not just a personal finance problem.
At a glance
- Medical debt relief: L.A. County used public funds to buy portfolios of unpaid hospital debt from creditors at pennies on the dollar, then canceled what residents owed entirely — with no action required from recipients.
- RIP Medical Debt: The New York-based nonprofit has helped cancel more than $10 billion in medical debt nationally since 2014 C.E. by leveraging the deep discount at which medical debt trades on secondary markets.
- Eligible residents: The relief targeted people earning up to four times the federal poverty level — roughly $120,000 for a family of four — as well as those whose medical debt exceeded five percent of their annual income.
Why medical debt hits so hard in L.A.
Los Angeles County is home to more than 10 million people, and an estimated one in five adults carries some form of medical debt. For communities of color — particularly Black and Latino residents — the burden is disproportionately heavy, a product of decades of unequal access to insurance, employment, and healthcare. Medical bills are the leading cause of personal bankruptcy in the United States, and unpaid debt can drag down credit scores for years, making it harder to rent an apartment, get a car loan, or find stable work.
That cycle makes medical debt both a symptom and a cause of poverty. County officials have argued that canceling this debt is not charity — it is a direct investment in economic stability and public health.
How the program works
Medical debt is routinely sold by hospitals to debt collectors at steep discounts, sometimes for as little as one or two cents per dollar owed. RIP Medical Debt exploits this same market mechanism, purchasing portfolios of unpaid bills in bulk — and then, instead of collecting, abolishing the debt entirely.
L.A. County allocated funds to purchase debt held by residents who met income and hardship criteria. Recipients received a letter in the mail informing them their debt had been erased. No application. No paperwork. No catch. For many, it was the first piece of genuinely good financial news they had received in years.
RIP Medical Debt estimates that every dollar of public or philanthropic investment can retire roughly $100 in medical bills at face value, meaning the county’s outlay erased debt worth far more than the funds spent. L.A. County is among a growing list of cities and counties — including cities studied by the Urban Institute — exploring this approach as a scalable public health intervention.
A national trend taking shape
L.A. County is not alone. Cook County in Illinois, several cities in the South, and a handful of state governments have launched similar programs in recent years. The approach gained momentum after reporting by KFF Health News revealed that more than 100 million Americans carry some form of medical debt — a figure that has driven bipartisan concern and, in some states, legislative action.
The Consumer Financial Protection Bureau has also moved to remove medical debt from credit reports entirely, a federal policy shift that would compound the impact of local debt cancellation programs.
Advocates note that these programs work best when paired with systemic reforms — including hospital charity care policies, surprise billing protections, and Medicaid expansion — that prevent new debt from accumulating. Debt cancellation resolves a past harm; preventing the harm in the first place requires structural change that debt relief alone cannot deliver.
What it means for residents
For the individuals receiving those letters, the impact is immediate and deeply personal. Medical debt does not disappear quietly — it shows up in collection calls, court judgments, and damaged credit files that follow people for years. Having it erased can unlock access to housing, reduce chronic stress, and free up income for food, childcare, and other basics.
Community health researchers have found that financial stress is itself a health risk, linked to higher rates of depression, hypertension, and delayed care. In that sense, erasing $63 million in debt is not just an economic intervention — it is a public health one.
The program does not resolve every inequity embedded in American healthcare. Millions of L.A. County residents still carry debt this round of relief did not reach, and the underlying costs of care remain high. But the county’s decision to act — and to do so using a proven, cost-effective mechanism — demonstrates that meaningful relief is possible within existing systems, even before those systems are fixed.
Read more
For more on this story, see: Good News for Humankind
For more from Good News for Humankind, see:
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- The Good News for Humankind archive on global health
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