Connecticut will be the first state to cancel medical debt for eligible residents, Gov. Ned Lamont announced Friday.
In an interview on ABC’s “Good Morning America,” the Democrat governor said the state aims to erase some $1 billion in medical debt this year by leveraging $6.5 million in American Rescue Plan Act funds.
Connecticut is contracting with a nonprofit that buys medical debt and eliminates it at a reduced cost, ABC News reported.
Those eligible will be residents whose household income is up to 400% of the federal poverty line — for a family of four, that’s $156,000 annually — or whose medical debt equals 5% or more of their annual income, ABC News reported.
About 250,000 residents anticipate seeing their medical debt erased with the initial $6.5 million investment, the outlet reported.
Connecticut figures shows that more than 1 in 10 of its residents have medical debt in collections.
A Consumer Financial Protection Bureau report found medical debt is the leading source of collections debt for Americans, beating out credit cards, personal loans, utilities and phone bills combined.
The percentage of Americans who are in families having trouble paying their medical bills in the past year was 10.8% in 2021, a report from the Centers for Disease Control and Prevention found.
A 2022 analysis of government data by the KFF-Peterson Health System Tracker estimated 9% of adults (about 23 million people) owed more than $250 in health costs.
Those more likely to report significant medical debt included people with a disability, uninsured adults, low-income adults, and Black Americans, the analysis showed.
The White House figures $16 million in the stimulus funds from the American Rescue Plan are being used to purchase and wipe out nearly $1.5 billion in medical debt in communities nationwide, including New Orleans; Pittsburgh; Toledo, Ohio; and Cook County, Ill., which includes Chicago.
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