Connecticut’s Democratic governor has revealed a drastic plan to wipe out medical debt for state residents – but has not yet revealed how intends to pay for erasing the $1billion bill.
Governor Ned Lamont announced the plan Good Morning America today, unveiled a plan to partner with a nonprofit organization that buys medical debt and ‘eliminates’ it at a reduced cost.
The move would help an estimated 250,000 residents and will be helped with a $6.5 million fund from the American Rescue Plan Act that sought to cancel medical debt, he said.
‘This is not something they did because they were spending too much money, this is something because they got hit with a medical emergency. They should not have to suffer twice, first with the illness, then with the debt.
‘I think it’s really important that people have a sense that they can start building wealth of their own,’ he said.
‘We’re making that easier for people to do and the best way to start is by eliminating the debt that you’ve got.’
Residents with a household income up to 400 percent of the federal poverty line, $124,800 annually for a family of four, or with debts equating to 5 percent of their annual income will be eligible.
With the initial $6.5 million from the American Rescue Plan Act, some 250,000 residents are expected to see their debt erased.
Connecticut Governor Ned Lamont says his state will purchase $1 billion of residents’ medical debt for just $6.5 million.
Then he will cancel it all, abolishing medical debt for 250,000 people.
This is the first time a state has forgiven medical debt at a massive scale. pic.twitter.com/HALkQqfMlC
— More Perfect Union (@MorePerfectUS) February 3, 2024
Households will not have to apply because the contracted agency will work with state agencies to automatically wipe their debts, according to the state.
The state also said that 1 in 10 Connecticut residents have medical debt, which is also the leading source of debt for Americans.
The percentage of American who are part of families having trouble paying medical bills was 10.8 percent in 2021.
A 2022 analysis of government data estimated that 9 percent of adults, or 23 million people, owed over $250 in health costs.
That same year, a poll by Kaiser Health News, laid bare the crippling price of health care many Americans face.
The survey saw more than 2,000 adults from across the country questioned about their healthcare either online or by phone.
Findings from the survey included that a quarter of Americans are currently battling to pay off debts higher than $5,000 from medical or dental bills.
One-in-five also believe they will never be able to cover the costs of care they needed.
And as many as one-in-seven said they had been blocked from entering hospitals because of outstanding medical bills.
Out of Americans struggling with healthcare bills, the survey revealed two thirds said they were cutting back on food, clothing and other basics to meet medical bills.
Half confessed to using up all or most of their savings that had been intended for retirement. And two in five said they had no choice but to take on extra work to cover the costs.
According to the survey, those in Wyoming were most in debt, followed by Alaska and Utah.
Meanwhile Massachusetts, Minnesota and New York state were counted as the states with the lowest amounts of medical debt.
While no states have announced such plans, New York City recently announced a plan to invest $18 million to help erase $2 billion in medical debt for up to 500,000 eligible New Yorkers.
New Jersey have included $10 million in their most recent budget to fund a pilot program to cancel medical debt.
In a similar fashion, Colorado last year passed a law removing medical debt from credit reports, becoming the first state to enact such legislation.