said Democratic Governor Ned Lamont of Connecticut. ABC News” “Good Morning America” on Friday reported that the state plans to become the first in the nation to forgive medical debt for eligible residents.
The state estimates that 250,000 residents could eliminate about $1 billion in medical debt. People whose household income is less than 400% of the federal poverty line or whose medical debt is more than 5% of their annual income may be eligible for the cancellation program, ABC News reported.
The state says it will work with nonprofit organizations that will buy the debt and eliminate it at a low cost. Contracting agencies partner with state agencies to automatically cancel medical debt. Therefore, residents do not need to apply. The state told news outlets that cancellations should begin by June. It also pointed out that more than one in 10 residents are in debt to collect medical expenses.
“This wasn’t something they did because they spent too much money,” Lamont said. “This is simply because they have a medical emergency. They don’t have to suffer twice, first through illness and then into debt.”
“I think it’s really important for people to have a sense that they can start building their own wealth,” he continued. “We’re making it easier for people to do that, and the best way to start is to get rid of the debt you have.”
Connecticut plans to use $6.5 million from the state to cancel some of its debt. American Rescue Plan Actsigned by President Biden (Democratic) in 2021.
Other cities and counties – including New Orleans, Louisiana. Pittsburgh, Pennsylvania. Toledo, Ohio. Cook County, Illinois is using funds from the American Rescue Plan to eliminate medical debt for residents. New York City Mayor Eric Adams (D) recently announced that his administration will cancel more than $2 billion in medical debt for 500,000 residents, Blaze News previously reported.
The Biden administration reported that $16 million in funding is being used to eliminate about $1.5 billion in debt nationwide.
According to the Consumer Financial Protection Bureau, the main causes of medical debt are: More than 50% of debt has been collected — more than all other sources of debt combined, including credit cards, personal loans, utility bills, and phone bills.
Lamont first announced plan to eliminate medical debt February last year.
“Several states and local governments have had great success in using this model to wipe out medical debt for their residents, and we think this is absolutely the right way to use these COVID-19 recovery funds.” Lamont said. “This initiative will not only help Connecticut residents who are financially in debt, but also the significant impact this type of debt has on individuals who do not have the means to get out, especially those who have significant problems at the same time. This debt cancellation will return millions of dollars to Connecticut’s economy and provide economic stimulus to local communities. ”
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