St. Paul's high-profile plan to wipe away roughly $100 million in medical bills ended quietly this month after the city used only a fraction of its funds to cancel about $15.4 million for roughly 14,000 residents. The modest finish has critics and some council members asking whether the buy-and-forgive approach was oversold and whether the leftover American Rescue Plan (ARPA) money could have been put to broader use.
According to the Star Tribune, the nonprofit Undue Medical Debt purchased $15.4 million of unpaid balances from Fairview Health Services for about $302,000 and erased those accounts for roughly 14,000 people. The initiative was seeded with $1.1 million in ARPA funds and was promoted as a way to eliminate an estimated $110 million in qualifying debt. The Star Tribune report also found the vendor’s initial zip-code matching included some accounts outside city limits, and that error, combined with limited hospital participation, helped shrink the program’s reach.
The city’s own press materials told a more sweeping story: in November 2024 the mayor’s office celebrated what it called nearly $40 million in relief for 32,000 residents, and the program page explained how $1.1 million could stretch to roughly $110 million of face-value bills. As outlined by the City of Saint Paul, Undue would work directly with local health systems to identify qualifying accounts and automatically notify residents when balances were cleared.
How the Math Works and Why It Can Still Miss
Undue Medical Debt's model depends on buying charged-off hospital bills at steep discounts; as Undue Medical Debt notes in its 2025 impact report, under the right conditions a dollar from a government partner can eliminate more than $100 in face-value debt. But those results require hospitals to sell portfolios that contain eligible accounts and for the vendor to be able to confidently match accounts to city residents, a chain of steps that did not come together cleanly in St. Paul.
“How do I feel about spending $302,000 to erase $15 million in medical debt? We should have a getaway car!” Mayor Melvin Carter told the Star Tribune, conceding the program did not scale as he had hoped. Carter said he still viewed the effort as meaningful relief for the residents who benefited, even as some opponents questioned the oversight and assumptions behind the plan.
Hospitals and Eligibility Limits
Undue's own materials and partner briefings caution that securing hospital participation often means navigating internal pricing, legal reviews and multi-level approvals, which became barriers that limited additional buys in St. Paul. Combined with the program’s residency and income rules, and the technical issues around zip-code eligibility, officials found far fewer eligible accounts than the early estimates assumed.
Council Reclassifies the Leftover Funds
On June 17 the City Council passed a resolution authorizing the reclassification of the Medical Debt Reset project's unspent ARPA authority to other ARPA-eligible projects, shifting the remaining budget into asset-management and virtual-inspection accounts, per the council document. The Legistar entry for the resolution records the action that effectively closed the city’s formal role in buying more hospital accounts under this initiative.
St. Paul’s experience mirrors challenges other jurisdictions have hit when trying to convert ARPA allocations into large, one-time debt relief efforts. Tracking by The New School’s Budget Equity Project shows several local programs have been scaled back or adjusted after encountering provider hesitancy and timing constraints.
For now, city leaders note that thousands of residents did receive relief. But the sizable gap between the headline pledge and the realized results will likely shape how St. Paul and other cities weigh similar one-off fixes versus longer-term policy or regulatory changes to address the root causes of medical debt.
