Governor Hobbs Erases Historic $1 Billion of Medical Debt for Arizonans: In a landmark effort aimed at improving financial stability and health outcomes, Arizona Governor Katie Hobbs has announced that more than $1 billion in medical debt owed by Arizona residents has been erased through a partnership between the Hobbs administration and national nonprofit Undue Medical Debt.
To date, 670,963 Arizonans have received medical debt relief through the initiative. The program does not use any state funds, making the milestone a significant example of public-private collaboration to address the financial burden associated with healthcare.
“From Tucson to Tolleson to Bullhead City, we are restoring hope, dignity, and peace of mind for hundreds of thousands of Arizonans,” Governor Hobbs said. “This vital work creates newfound freedom for so many Arizonans and is critical to achieving our promise as a state.”
More Than 200,000 Residents to Receive Relief Letters
As the initiative crosses the $1 billion milestone, more than 200,000 Arizonans are expected to receive debt-relief letters in their mailboxes this week.
The letters are being sent by Undue Medical Debt and notify eligible recipients that some or all of their outstanding medical debt has been erased. Recipients do not need to apply, make a payment or take any action to receive the relief.
The initiative is designed to reach residents who have been struggling with medical bills and who meet the program’s eligibility criteria.
Who Qualifies for Medical Debt Relief?
There is no application process, and individuals cannot request debt relief directly through the program.
Arizonans may qualify if they:
- Owe medical debt equal to at least 5% of their annual household income, or
- Have an income at or below 400% of the Federal Poverty Level, which is approximately $100,000 for a family of three.
The program can only eliminate medical debt acquired from participating healthcare providers, hospitals and collection agencies.
Undue Medical Debt purchases portfolios of medical debt belonging to financially burdened patients for a fraction of their original value. It then cancels the debt rather than attempting to collect it from the individuals who owe it.
$2.4 Billion in Medical Debt Before Initiative
The scale of the program is particularly significant given the estimated level of medical debt in Arizona before the governor’s initiative.
Medical debt in the state had previously been estimated at approximately $2.4 billion. The elimination of more than $1 billion therefore represents a substantial reduction in the medical debt burden affecting Arizona residents.
Medical debt can have consequences extending far beyond household finances. It can cause people to postpone necessary medical treatment, damage credit scores, affect employment opportunities and contribute to physical and mental health challenges.
Undue Medical Debt Praises Arizona Partnership
Allison Sesso, President and CEO of Undue Medical Debt, said crossing the $1 billion threshold represents an important milestone for the program.
“I am proud to stand with Governor Hobbs and the state of Arizona as this debt relief effort surpasses $1 billion of medical debt erased for those least able to pay,” Sesso said.
She added that no one should face financial ruin because they became sick, were involved in an accident or were born with a chronic illness. According to Sesso, medical debt relief can provide immediate financial support while helping families reconnect with the healthcare system.
She also emphasized the need for broader policy changes to reduce barriers to healthcare and make comprehensive, affordable coverage more accessible.
Arizona Healthcare Industry Supports Initiative
Ann-Marie Alameddin, President and CEO of the Arizona Hospital and Healthcare Association, also welcomed the milestone.
“Surpassing $1 billion in medical debt relief is a significant milestone, but the real impact is measured in the lives of Arizona patients and families,” Alameddin said.
She said the initiative helps reduce the financial pressure many families experience following a health crisis and expressed the organization’s commitment to working with partners to make healthcare more affordable across Arizona.
Residents Describe Relief as a “Weight Lifted”
For many recipients, the program has provided more than financial assistance—it has brought relief from years of stress and uncertainty.
A Payson paramedic injured in the line of duty said the relief was particularly meaningful after struggling to make payments while receiving workers’ compensation.
A Mesa resident and disabled combat veteran, who is also a single father of two, described losing his home and car and said the debt relief restored hope during a difficult period.
A woman in her 50s from Bullhead City said the medical debt had followed her for years and affected her credit, describing the relief as extremely meaningful.
A Phoenix resident recovering from surgery said creditors had been contacting her since 2018 and described becoming medical-debt-free as “one huge weight lifted.”
Other recipients included a widow and breast cancer survivor from Chandler, a disabled veteran from Casa Grande, and residents of Phoenix, Kingman, San Tan Valley and Tolleson who described receiving unexpected letters notifying them that their medical debt had been erased.
One San Tan Valley resident, who had recently undergone a lung removal, said she was initially reluctant to open the letter because of the mounting medical bills but was overwhelmed with relief when she learned that her debt had been eliminated.
A Tolleson resident who had experienced the traumatic loss of a baby said receiving medical bills immediately after leaving the hospital had added to an already devastating experience. The debt relief, she said, helped tremendously.
Another Phoenix resident, a double-lung transplant recipient, said the relief was a blessing while living on Social Security income and struggling with numerous medical bills.
A Model for Addressing Medical Debt
The Arizona initiative comes as medical debt continues to be a major financial challenge for households across the United States. The partnership between the state administration and Undue Medical Debt demonstrates how nonprofit debt purchasing and cancellation can be combined with government leadership without directly using taxpayer funds for the debt payments.
For the 670,963 Arizonans who have received relief, however, the impact is personal: fewer bills, reduced financial pressure and, for many families, a renewed sense of stability.
The program’s passage of the $1 billion medical-debt relief milestone represents one of Arizona’s most significant recent efforts to address the economic consequences of healthcare costs while highlighting the continuing national debate over healthcare affordability.
