NC governor moves to wipe medical debt for 2 million residents

More than two million North Carolinians could be freed of medical debt in the coming years under a newly announced plan from Gov. Roy Cooper and state health department Secretary Kody Kinsley .

Why it matters: The move could relieve as much as $4 billion in debt that low- and middle-income North Carolinians owe to the state's hospitals beginning as early as 2025.

• Doing so would help hospitals as well, state leaders say, by funneling additional federal funds to them that could offset the money they are owed — and in many cases, would not get back in full — from patients.
• "Freeing people from medical debt can be life changing for families, as well as boost the overall economic health of North Carolina," Cooper said in a statement Monday.

How it works: North Carolina is asking the federal government to approve a proposal to provide hospitals with additional Medicaid dollars if they relieve existing and move to prevent some future medical debt. Eligible medical debt could date back to 2014 and include:

• Non-Medicaid recipients who have debt deemed uncollectible and incomes below 350% of the federal poverty line or debt worth more than 5% of their annual income.
• Medicaid recipients.

Going forward, hospitals would also need to:

• Discount medical bills on an income-based sliding scale for those with income below 300% of the federal poverty line, or $93,600 for a family of four.
• Implement a policy to automatically enroll patients in financial assistance, also known as charity care, rather than requiring patients to apply for assistance.
• Commit to not selling the medical debt of patients with income below 300% of the federal poverty line.
• Commit to not reporting certain patients' debt to credit reporting agencies.
• Cap interest rates on medical debt at 3%.

What's next: The federal government must approve the plan. If it does, hospitals would then have to opt in to the program and work with a third-party vendor to identify outstanding debt eligible for relief.

The big picture: North Carolina is among the states holding the biggest share of medical debt , Axios reported earlier this year.

• Between 2019-2021, 13.4% of North Carolinian adults had medical debt.
• The state has since expanded Medicaid, making another 600,000 residents eligible for health coverage.

Go deeper:

• NC hospitals rake in millions from medical debt lawsuits
• Mapped: States with the highest share of medical debt
• Medicaid enrollment soars in North Carolina after expansion