Connecticut’s governor, Ned Lamont, has unveiled a bold plan to eliminate medical debt for state residents. However, he has yet to disclose how the state intends to fund the erasure of the $1 billion bill.
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Governor Lamont announced the plan on Good Morning America, revealing that Connecticut would partner with a nonprofit organization that purchases medical debt and eliminates it at a reduced cost. The initiative aims to assist approximately 250,000 residents and will be supported by a $6.5 million fund from the American Rescue Plan Act, which was designed to address medical debt cancellation. Lamont emphasized the importance of relieving individuals from the burden of medical debt, stating, “This is not something they did because they were spending too much money; this is something because they got hit with a medical emergency. They should not have to suffer twice, first with the illness, then with the debt. I think it’s really important that people have a sense that they can start building wealth of their own.”
Under the plan, residents with a household income up to 400 percent of the federal poverty line, or $124,800 annually for a family of four, will be eligible. Additionally, those with debts equivalent to 5 percent of their annual income will qualify. The initial $6.5 million from the American Rescue Plan Act is expected to erase the debts of approximately 250,000 residents. To streamline the process, households will not need to apply for debt cancellation. Instead, the contracted agency will collaborate with state agencies to automatically eliminate the debts. According to the state, 1 in 10 Connecticut residents currently carry medical debt, making it the leading source of debt for Americans, as reported by the Daily Mail.
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National statistics indicate that 10.8 percent of Americans faced difficulties paying medical bills in 2021. A 2022 analysis estimated that 9 percent of adults, or 23 million people, owed over $250 in healthcare costs. A poll conducted by Kaiser Health News revealed that a quarter of Americans are struggling to pay off debts exceeding $5,000 from medical or dental bills. Additionally, one in five individuals believe they will never be able to cover the costs of necessary care.
While Connecticut is taking significant steps to address medical debt, other regions are also implementing initiatives. New York City recently announced an $18 million investment to erase up to $2 billion in medical debt for eligible residents. New Jersey has allocated $10 million in its latest budget to fund a pilot program for debt cancellation. Colorado passed legislation last year to remove medical debt from credit reports, making it the first state to enact such a law.
Governor Lamont’s plan in Connecticut aims to alleviate the financial burden of medical debt for its residents, providing them with an opportunity to rebuild their financial well-being.
