HARTFORD — Gov. Ned Lamont unveiled a plan Thursday to pay down as much as $2 billion in medical debt for Connecticut residents using $20 million in federal relief funds, making Connecticut the first state to systematically erase medical debt in this way.
Under the proposal, which Lamont plans to include in his upcoming biennial budget, the state would partner with a nonprofit that purchases medical debt at a fraction of its original cost, then forgives borrowers.
“The biggest form of debt in our country is medical debt, and medical debt is something you don’t have any control over,” the governor said during a news conference at Urban Hope Refuge Church in Hartford. “This is going to be liberating for tens of thousands of our residents, to give them a fresh start on life just like that operation gave them a fresh start in life.”
Officials say the initiative would use funds from the federal American Rescue Plan. Residents would not have to apply and would simply receive notification that their medical debt has been forgiven.
At the news conference Thursday, advocates applauded Lamont and spoke of the burden of medical debt on individuals and families, who may struggle to access credit or even be driven into personal bankruptcy.
“No one wakes up and says, ‘I want to go to the hospital,'” said Ayesha Clarke, interim director of the Hartford-based nonprofit Health Equity Solutions. “However, when it happens, seeking care should not result in a lifetime of financial hardship.”
Dr. Deidre Gifford, executive director of Connecticut’s Office of Health Strategy, noted that the debt relief proposal would particularly benefit Black and Latino residents, who are disproportionately likely to have medical debt. According to the U.S. Census Bureau, 19 percent of households nationwide had medical debt, including 27.9 percent of Black households and 21.7 percent of Hispanic households.
“The governor’s proposal will significantly reduce the inequity in this area and will provide relief to families in need,” Gifford said.
Though no other state has sought to erase medical debt in the way Lamont has proposed, the model has been implemented at the municipal level in Somerville, Mass.; Toledo, Ohio; and Cook County, Illinois, which includes Chicago. Lamont said Connecticut plans to partner with the same nonprofit as those local governments, a New York-based group called RIP Medical Debt.
Gifford said the Lamont administration will work out details of the debt relief program once it has been approved by the state legislature but that officials believe $20 million in funding “has the potential to erase as much as $2 billion” of medical debt.
In addition to debt relief, Gifford called on hospitals, insurers, employers and state government to address rising health care costs “to prevent medical debt in the first place” moving forward.
The governor’s announcement Thursday comes as he prepares to roll out his biennial budget next week. Lamont has spent recent days unveiling components of his broader proposal, such as a new gun reform measures and tax relief for low-income workers.
Asked Thursday why he considered medical debt relief to be the best use of ARPA funds, Lamont said the policy could be “transformative” for someone burdened with debt.
“It’s the right thing to do, it takes that dark cloud [away],” he said. “Imagine getting that letter saying you’re now debt-free.”
