North Carolina has wiped out more than $6 billion in medical debt for roughly 2.5 million residents, making it the largest state-level medical debt relief effort in U.S. history. The program, funded through the state’s share of a Medicaid expansion windfall, required no application, no paperwork, and no action from the people it helped — relief simply arrived.
At a glance
- Medical debt relief: North Carolina erased more than $6 billion in medical debt, benefiting approximately 2.5 million people — about one in four state residents.
- Funding source: The state used $140 million in savings generated by its 2023 Medicaid expansion to purchase debt portfolios at pennies on the dollar through RIP Medical Debt, a nonprofit that acquires and cancels medical bills.
- Automatic relief: Eligible residents — those with incomes below 400% of the federal poverty level or whose medical debt exceeds 5% of their annual income — received notification letters with no action required on their part.
Why medical debt relief matters
Medical debt is the leading cause of personal bankruptcy in the United States. It affects an estimated 100 million Americans and disproportionately burdens lower-income households, people of color, and rural communities — all groups heavily represented in North Carolina.
Unlike other forms of debt, medical bills are rarely chosen. A car accident, a cancer diagnosis, a difficult childbirth — these are not financial decisions. Yet the bills they generate can follow people for years, damaging credit scores, preventing home purchases, and generating persistent stress that itself worsens health outcomes.
Research published in the American Journal of Public Health has linked medical debt to delayed care, medication rationing, and increased mortality. Eliminating it, even retroactively, has measurable downstream benefits: people with relieved debt report seeking preventive care sooner and managing chronic conditions more consistently.
How the program works
The mechanism behind the relief is straightforward but powerful. Medical debt is routinely sold by hospitals and collection agencies at steep discounts — sometimes for less than a cent per dollar of face value. RIP Medical Debt, the nonprofit partner in North Carolina’s program, purchases these portfolios and cancels them outright rather than attempting collection.
North Carolina’s $140 million investment leveraged this discount dramatically, erasing roughly $6.5 billion in debt — a ratio of more than 40-to-1. Governor Roy Cooper’s administration structured the program as a direct use of savings the state realized after expanding Medicaid under the Affordable Care Act in 2023, meaning it required no new appropriation or tax increase.
The model has been tested at smaller scales by cities including New York and Cook County, Illinois, but North Carolina’s program dwarfs all previous efforts in both scale and reach.
Who benefits — and what remains unresolved
The program specifically targets residents earning below 400% of the federal poverty level, which in 2025 C.E. means individuals earning up to roughly $60,000 annually. This threshold captures a wide swath of working and middle-class households who are too financially stable to qualify for most assistance programs but too economically precarious to absorb large medical bills.
Black and Latino residents in North Carolina carry disproportionately high rates of medical debt, according to Commonwealth Fund data, meaning relief is likely flowing heavily toward communities that have historically faced the greatest barriers to care. Rural counties, where hospital closures have driven patients toward more distant and more expensive facilities, are also expected to see significant benefit.
Still, the initiative does not address the root cause: a health system that continues generating unaffordable bills. Even as millions of residents have their past debt erased, new debt accumulates daily. And the program, while historic in scale, cannot reach everyone — those with debt tied up in structures not accessible for purchase, or those whose debt has already been discharged through bankruptcy, may see no benefit. Advocates argue debt cancellation must be paired with systemic pricing reforms and stronger consumer protections to create lasting change.
A model for other states
North Carolina’s success has already drawn interest from other state governments. The Robert Wood Johnson Foundation and other health policy organizations have pointed to this model as a replicable approach — particularly for states that have recently expanded Medicaid and may hold similar savings. Several states are now exploring comparable programs.
The program also demonstrates that government can use existing financial tools creatively. The debt market that made medical bills into tradeable assets is the same mechanism that allowed North Carolina to cancel them at scale. Medicaid expansion created the fiscal headroom; political will did the rest.
For 2.5 million North Carolinians, 2025 C.E. marks the year a bill they may have carried for years — one that shaped where they lived, whether they sought care, and how they thought about their financial future — simply disappeared.
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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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