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Published on March 04, 2024
Arizona Governor Katie Hobbs Partners with RIP Medical Debt to Clear $200M for Struggling ResidentsSource: Facebook/Governor Katie Hobbs

In a significant move aimed at tackling the healthcare cost crisis, Arizona Governor Katie Hobbs has announced a partnership with the charity RIP Medical Debt to abolish up to $200 million in medical debt for residents, targeting those who are in the low to moderate-income bracket, those making up to 400 percent of the poverty line, or those buried under debts totaling five percent or more of their annual income, according to AZ Family.

The initiative, deemed "Affordable Arizona: Tackling Medical Debt for Working Families," is part of the state's approach in utilizing up to $30 million in American Rescue Plan Act (ARPA) funds, which Hobbs says will retire the medical debt of nearly one million Arizonan residents, this effort follows the actions taken by SCAN Group and CareOregon the previous summer when approximately $110 million of state residents' medical debt was cleared, a transaction that involved merely $345,000 to purchase those debts from RIP Medical Debt, which by design negotiates to buy debts for pennies on the dollar, 12News reports.

Gov. Hobbs cited the essential nature of healthcare, stating, "Healthcare is not just a line item in a budget, it's a building block for thriving," Hobbs said. "No Arizonan should have debt hanging over their head because they needed help through no fault of their own." this program intends to alleviate such burdens by buying back the debt from hospitals, healthcare providers, and debt collectors, with an automatic adjustment to the individual's credit score following the buyback.

The problem of medical debt in Arizona is part of a much larger national crisis with studies such as one by ValuePenguin showing exorbitant hospital costs, and reports indicating nearly a third of GoFundMe donations are directed towards healthcare expenses, Arizona has made strides to alleviate some of the financial strain with measures like Prop 209 which caps interest rates on medical debt and adjusts exemption rates annually to match the cost of living, AZ Family elaborates.

The debt relief endeavors are expected to roll out over the next couple of years until the ARPA funds expire, with Gov. Hobbs and her administration betting on the program as a "win-win" that will afford many in Arizona the luxury of a fresh start and the prospects of a more secure future, more information about the program will be forthcoming on the governor's official website.