New Jersey’s medical debt relief program has now retired more than $1.6 billion in unpaid bills for nearly 900,000 New Jersey residents since 2023 C.E. The ninth and final round, announced by the state health department on Sept. 17, erases $90 million for nearly 20,000 people.
At a glance
- Final round: Nearly 20,000 residents who owed a combined $90 million are getting letters from the nonprofit Undue Medical Debt. The letters say their bills are gone, and no action is needed.
- Eligibility: Relief went to people at or below 400% of the federal poverty line, or whose unpaid medical bills equaled 5% or more of their annual income. Residents could not apply.
- Funding: The state used an initial investment plus one-time federal American Rescue Plan funds. Those funds are now fully spent.
How medical debt relief worked in New Jersey
The state partnered with Undue, a nonprofit, to buy qualifying debt from healthcare providers. Hospitals and collection agencies often sell unpaid bills at steep discounts. Undue buys them in bundles and cancels them instead of collecting.
The math is lopsided. In 2024 C.E., New Jersey spent roughly $550,000 in federal funds to clear $100 million in debt held by more than 46,000 residents, the New Jersey Monitor reported. Undue says each dollar donated erases about $100 in debt, on average.
Because the debt is bought from sellers, no one could request relief. It depended on hospitals, collectors, and other holders choosing to sell. People learned of it when an Undue-branded letter arrived.
Protections beyond one-time relief
New Jersey paired the purchases with new rules. A 2024 C.E. state law bars most unpaid medical bills from being reported to credit-rating agencies. It also caps interest on those bills at 3%.
Other parts of the law were set to take effect on July 22, 2025 C.E. They require payment plans and ban wage garnishment over medical bills for residents earning under 600% of the federal poverty line.
The state also funds care for people who cannot pay. Its fiscal 2027 budget includes $83.9 million for charity care and $39 million for an uncompensated care fund.
What the research says
Debt cancellation helps people, but the evidence on how much is mixed. A study in the Quarterly Journal of Economics followed relief that Undue delivered to 83,401 people between 2018 and 2020 C.E. Researchers found no average effects on mental health, physical health, healthcare use, or financial well-being, in a paper posted by the National Bureau of Economic Research.
They did find a modest gain in credit access when the debt would otherwise have been reported to credit bureaus. They also found a moderate drop in payments on people’s other medical bills. New Jersey now bars most reporting of such bills.
Undue has said the study did not reflect later changes that let it relieve more debt and reach more middle-income households, WYSU public radio reported.
What remains unresolved
The relief program is over. State officials say the funds are fully spent, and the health department says it will keep working to lower the cost of care.
Costs remain a heavy burden. In 2024 C.E., nearly 1 in 7 New Jersey residents lived in families whose out-of-pocket health spending, including insurance premiums, topped 10% of their income, the state says. Its research finds that rising prices, not more use of care, are the main driver of cost growth.
“Medical debt is a symptom of the problem in our healthcare system,” said Health Commissioner Raynard E. Washington.
New Jersey’s debt purchases are finished, but the work of making care affordable is not. The program joins a growing list of economic justice wins that ease financial strain for working families.
Read more
For more on this story, see: New Jersey Department of Health
For more from Good News for Humankind, see:
- North Carolina erases more than $6 billion in medical debt for 2.5 million residents
- Los Angeles County erases $63 million in medical debt for low-income residents
- The Good News for Humankind archive on global health
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