New Jersey Governor Phil Murphy forgives $100 million in medical debt

By Liya Cui

NEW YORK (Reuters) - Nearly 50,000 people in New Jersey will have $100 million in medical debt erased, Governor Phil Murphy said on Tuesday, in one of the largest cases of a state providing direct relief to people unable to pay medical bills.

Murphy allocated $550,000 in federal American Rescue Plan funds and partnered with Undue Medical Debt, a non-profit that buys unpaid medical bills from hospitals at a discount, to execute the one-time debt abolishment.

New Jersey residents who qualify for the relief began receiving letters on Monday, according to a press release from the governor's office.

“Medical debt accumulates very quickly and can follow a person for decades," Murphy said in the release. "We are wiping the slate clean for thousands of New Jersey families, eliminating their debt, and making a real, tangible impact on their lives."

Those who qualify for the relief are at least four times below the federal poverty level or have medical debt that equals 5% or more of their annual income, according to the press release.

The relief will go to 17,905 people who owed $61.6 million to Prime Healthcare hospitals and 31,748 people owing about $38.4 million to collection agencies and other debt holders.

Undue has partnered with local governments to acquire debt from hospitals since 2022. Arizona, Indiana and New York City have announced programs this year that could each eventually erase $1 billion-$2 billion in medical debt with the help of Undue.

Governments have also leveraged funds from the American Rescue Plan, the $1.9 trillion coronavirus relief bill signed in 2021, to eliminate an estimated $7 billion in medical debt for nearly 3 million Americans, according to a White House press statement in July.

Some states are finding other methods to relieve their residents of burdensome medical bills, such as North Carolina, which received approval from the Biden administration last month to incentivize hospitals to forgive the debt of roughly 2 million residents in exchange for more Medicaid funds.

(Reporting by Liya Cui; Editing by Stephen Coates)