An additional sum exceeding $200 million in health care arrears has been cleared for people across the state.
Those receiving this financial relief will be left with no doubt regarding whom to credit: Governor Katie Hobbs.
Allison Sasso, CEO of Undue Medical Debt, revealed the updated figures on Monday. Her organization partnered with the state earlier this year, utilizing roughly $10 million in federal American Rescue Plan funds to purchase outstanding medical bills from providers for pennies on the dollar, effectively removing derogatory marks from the credit histories of those involved.
According to the governor’s office, the initiative has now eliminated a cumulative $642 million in debt for over 485,000 Arizonans.
As part of the agreement between the state and the nonprofit, the notification letters sent to beneficiaries explicitly acknowledge both Undue Medical and the governor.
This initiative stems from a broader debt-relief model that Undue Medical operates nationwide.
Founded in 2014, the group leverages both public funds and private contributions to acquire portfolios of unpaid medical bills from hospitals and debt buyers.
The funds stretch further because, as company officials explain, the debt has aged to the point where creditors are willing to sell the rights to it for a fraction of the original value.
Residents cannot apply for this relief; rather, the organization locates them.
The process begins with determining eligibility.
The program targets individuals with incomes below 400% of the federal poverty line—currently $128,600 for a family of four—as well as those whose medical debt exceeds 5% of their annual income. This second criterion assists those who earn more but face insurmountable bills.
To identify these individuals, Undue Medical purchases relevant income data from credit reporting agencies.
This data is then cross-referenced with lists of past-due accounts provided by medical providers and other debt holders.
After the debt is settled, the patient receives a letter in an Undue Medical envelope, informing them for the first time that their balance is zero and the credit bureau has been notified.
However, the recipients are given a clear indication at that moment of who facilitated the aid.
The 2024 agreement Hobbs signed with the charity stipulates that beneficiaries must be informed that the financial relief is the result of executive action, requiring that all marketing materials include logos or insignia approved by the governor’s office.
Christian Slater, a press aide for the governor, defended this requirement in July, arguing that the letters serve to tell people not just that their debt was relieved, but “how it happened.”
Why is it necessary to explicitly credit the governor?
Slater noted that this specific relief would not have been possible without the governor’s leadership and her focus on reducing costs and delivering economic opportunities for every Arizonan.
Undue Medical emphasizes that a key benefit is the financial clean slate provided to the patient.
Typically, forgiven debt is treated as taxable income, but Courtney Story, the charity’s vice president of government initiatives, explained in July that this rule does not apply when the funds come from a “disinterested third party.”
“Because we’re a nonprofit, we’re not part of the health care system, we count as a disinterested third party, as does the government,” she said.
Story added that this applies to private donors as well, whether they choose to remain anonymous or reveal their names to recipients.
In Monday’s press release, Hobbs shared anonymous comments from three Arizonans who expressed gratitude that their debts had been wiped out.
These testimonials were available because the state’s contract with Undue Medical mandates that patient stories and insights be shared with the governor’s office on a regular basis.
Regarding how the governor might use these testimonials, a company spokesperson stated at the program’s launch that, to their knowledge, there were no restrictions on their usage.
When unveiling the plan in 2024, Hobbs maintained that using federal funds to pay off the medical debts of private citizens was entirely lawful.
This is notable because the Arizona Constitution forbids the state from making donations or grants to any individual, association, or corporation.
“I can assure you we would not be taking this action if we weren’t fully confident in the legality of it,” Hobbs stated.
Furthermore, she noted that Arizona is not the first jurisdiction to utilize COVID-19 relief dollars from the American Rescue Plan Act in this manner.
Undue Medical pointed to similar programs utilized by other leaders, citing recent announcements from Delaware Governor Matt Meyer, Connecticut Governor Ned Lamont, Illinois Governor JB Pritzker, and the Los Angeles County Board of Supervisors.