More than 2.5 million residents in North Carolina will have over $6.5 billion in medical debt eliminated as part of a state initiative that uses federal Medicaid funds to provide financial relief and discourage future medical debt, according to an announcement by Governor Josh Stein and state health officials.
The initiative, first introduced by former Governor Roy Cooper 15 months ago, has surpassed initial projections. Officials had previously estimated that about 2 million people would benefit from the removal of $4 billion in debt. Now, nearly a quarter of the state’s population will see an average of $2,600 in medical debt erased from their credit reports.
“This is life-changing news for so many families,” said Governor Stein. “No one chooses to have a heart attack or get diagnosed with a chronic condition — you just have to deal with it. Today’s announcement will free people from the financial stress so that they can focus on getting healthy.”
Hospitals participating in the program have begun notifying patients that their debts are canceled. Undue Medical Debt, a national organization involved in the effort, plans to send notices this week to 255,000 additional recipients.
The program was developed as part of the Healthcare Access and Stabilization Program approved by state legislators in 2023 alongside expanded Medicaid coverage for working adults who did not previously qualify for traditional Medicaid. Hospitals contribute assessments to access federal funding under this arrangement.
To participate, hospitals were required to eliminate medical debt dating back to early 2014 for Medicaid enrollees and later expand relief based on income levels for non-enrollees. They also agreed to implement measures such as automatic enrollment in charity care programs and restrictions on certain debt collection practices.
Jose Penabad, vice chair of Undue Medical Debt, noted that North Carolina’s approach is distinct: “North Carolina’s approach is completely unique.” He added that other states are monitoring North Carolina’s use of Medicaid incentives closely.
State Deputy Health Secretary Jonathan Kappler explained that some hospitals went beyond requirements by eliminating debts incurred at affiliated physician practices as well. Additional debt relief is expected in the future.
Dr. Dev Sangvai, state health secretary, stated that recent changes made by Congress regarding Medicaid policy will not immediately impact this debt elimination initiative.
Other states have used federal American Rescue Plan funds for similar efforts; for example, Arizona recently reported erasing $429 million in medical debt for more than 352,000 residents.
