Connecticut Will Reportedly Cancel $1 Billion In Residents’ Medical Debt

On Friday, Connecticut Gov. Ned Lamont (D) announced that his state would soon become the first state to cancel medical debt — wiping away roughly $1 billion in medical bills for eligible Connecticut residents using money from the COVID-era American Rescue Plan Act.

The Democrat governor revealed his plans during a Friday appearance on ABC News Channel’s “Good Morning America,” where he explained that people dealing with debt from medical bills “should not have to suffer twice.”

“This is not something they did because they were spending too much money, this is something because they got hit with a medical emergency,” Lamont explained. “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 later added. “We’re making that easier for people to do — and the best way to start is eliminate the debt you’ve got.”

Lamont’s plan involves using $6.5 million in funds from the 2021 American Rescue Plan Act to contract with a nonprofit organization that will then purchase the medical debt and eliminate it at a fraction of the current cost. This process involves the nonprofit organization buying the debt in the same way that for-profit debt collection firms do. However, instead of pursuing the debt collection from the individuals, the nonprofit would notify them that their debt has been canceled, according to reporting from NPR.

Any Connecticut resident whose household income is up to 400% above the federal poverty line — meaning those earning just under $125,000 annually for a family of four — would be eligible to apply for the medical debt cancellation. Those whose debt is equal to 5% or more of their annual income will also qualify to apply for medical debt cancellation.

According to the Connecticut state government, the $6.5 million in COVID-era funds will be enough to erase the medical debts of roughly 250,000 residents.

While Connecticut would be the first state to cancel medical debt if the plan moves forward, New York City has also announced plans to eliminate residents’ medical debt. In a press conference last month, New York City Mayor Eric Adams (D) and New York City Department of Health and Mental Hygiene (DOHMH) Commissioner Dr. Ashwin Vasan announced that the city would be investing $18 million to cancel $2 billion worth of medical debt over the next three years for up to 500,000 eligible residents.

“Getting health care shouldn’t be a burden that weighs on New Yorkers and their families,” Adams explained during the press conference. “Since day one, our administration has been driven by the clear mission of supporting working-class New Yorkers and today’s investment that will provide $2 billion in medical debt relief is another major step in delivering on that vision. Up to half a million New Yorkers will see their medical debt wiped thanks to this life-changing program — the largest municipal initiative of its kind in the country.”

“No one chooses to go into medical debt — if you’re sick or injured, you need to seek care,” he added. “But no New Yorker should have to choose between paying rent or for other essentials and paying off their medical debt, which is why we are proud to bring this relief to families across the five boroughs, as we continue to fight on behalf of working-class New Yorkers.”