Arizona Governor Katie Hobbs announced Tuesday that a partnership between her administration and the national nonprofit Undue Medical Debt has erased more than $1 billion in medical debt for state residents, a milestone that arrives as states increasingly experiment with debt abolition as a policy tool.
The initiative has delivered relief to 670,963 Arizonans to date, according to the governor’s office, with letters notifying more than 200,000 additional residents beginning to arrive this week. Notably, the program uses no state funds.
The mechanics will be familiar to industry participants. Undue Medical Debt purchases bundled portfolios of medical debt from participating hospitals and collection agencies for a fraction of face value, then cancels the obligations outright. Beneficiaries receive a letter informing them that some or all of their debt has been erased. There is no application process, and relief cannot be requested.
Eligibility is means-tested. Qualifying individuals either owe medical bills totaling at least 5% of their annual income or earn at or below 400% of the federal poverty level, roughly $100,000 for a family of three.
The scale of the effort is significant relative to the state’s overall medical debt load. Before the initiative launched, medical debt in Arizona was estimated at $2.4 billion, meaning the program has now retired an amount equal to more than 40% of that figure.
Undue Medical Debt CEO Allison Sesso framed the milestone as a response to declining healthcare accessibility, arguing that debt relief provides immediate support while allowing families to reengage with the healthcare system. She also called for policy changes to expand affordable coverage. Ann-Marie Alameddin, president and CEO of the Arizona Hospital and Healthcare Association, said the group was proud to have partnered on the effort.
The governor’s office positioned the program as an economic stability and health outcomes initiative, citing research linking medical debt to postponed care, declining credit scores, and diminished job opportunities.
