North Carolina Gov. Josh Stein (center), flanked by the state’s health secretary, Dr. Dev Sangvai (left) and an executive from Undue Medical Debt, Jose Penabad, speaks about the elimination of medical debt through an initiative involving hospitals and Medicaid in Raleigh, N.C.
Gary D. Robertson/AP
hide caption
toggle caption
Gary D. Robertson/AP
A routine trip to the mailbox turned into a moment of disbelief for Dawn Daly-Mack when she discovered a letter stating her medical bill had been paid. “I opened it up and it said, ‘Your medical bill has been paid,'” says Daly-Mack, 60, of Gaston, North Carolina. “I didn’t believe it.”
The letter was legitimate. Daly-Mack is one of approximately 2.5 million North Carolinians who had medical debt erased through a new statewide agreement with hospitals. The hospital forgave her $459 debt, stemming from a 2014 emergency room visit for a sinus infection.
“I was the only breadwinner in the family,” says Daly-Mack, who was caring for her disabled husband and two teenagers at the time. “I was not able to pay the bill.”
Ironically, she was employed as a nurse at the very hospital that had previously sought payment from her.
Addressing and Preventing Medical Debt
All 99 hospitals in the state agreed to halt collection efforts on certain debts incurred before 2014. Furthermore, they committed to automatically providing financial assistance discounts to eligible patients—eliminating the need for applications. A family of four earning less than $96,000 annually qualifies for these discounts.
“I’m excited for the people of North Carolina,” says Allison Sesso, CEO of Undue Medical Debt, a nonprofit that acquires and forgives medical debt. “This approach tackles both existing debt and the systemic issues that create it.”
Hospitals collaborated with Sesso’s team to identify qualifying individuals and notify them of the debt relief.
For Kody Kinsley, the former North Carolina health secretary, this issue resonated on a personal level.
“My second year of college, my father had a massive stroke,” Kinsley recalls. His mother’s immediate concern was how to cover the costs: “A key thought in her mind was, ‘We don’t have health insurance. Oh my God. We’re gonna end up in debt.'”
Fortunately, Kinsley was able to secure a hospital discount.
Years later, as health secretary, Kinsley encountered similar stories statewide. Even after 675,000 people gained Medicaid coverage through the expansion in 2023, many still struggled with lingering medical debt.
“They had a forward path, but they were still wrestling with that backward,” he says.
Kinsley developed a plan to address both past and future debt. The state linked additional Medicaid funding for hospitals to debt relief for debts dating back to 2014—the earliest date the state could have expanded Medicaid. Hospitals also agreed to automatically apply financial assistance, removing the burden from patients.
“People can walk in the front door of a hospital in an emergency situation and not feel like they’re risking both their health and their financial well-being,” Kinsley says.
A Patchwork of State Solutions to Medical Debt
Other states are also taking action to address this $220 billion problem, which impacts 1 in 12 Americans.
Arizona and New Jersey used state funds to purchase and forgive medical debt. Oregon and Illinois screen patients for financial assistance. Colorado and New York prohibit medical debt from appearing on credit reports. The federal government recently reversed a similar protection.
Heather Howard, director of Princeton University’s State Health and Value Strategies program, is encouraged by the growing momentum but worries about the uneven access to assistance across the country.
“Your ZIP code is going to determine the protections you have,” Howard says.
She believes federal regulations are necessary to create a more comprehensive solution, especially given that President Trump’s health care policies are projected to leave 14 million more Americans uninsured.
“We shouldn’t be talking about a static problem,” Howard says. “This problem is going to grow.”
Potential Medicaid cuts and an increase in the uninsured population could strain hospitals’ finances, potentially challenging their ability to sustain these efforts. The North Carolina Healthcare Association, representing hospitals, notes that these cuts could make “sustaining these efforts more challenging.”
