L.A. County Will Launch Pilot Program to Eliminate Low-Income Residents’ Medical Debt

June 25, 2024

A $5 million investment will eliminate an estimated $500 million of debt for 150,000 people

Los Angeles, CA—Today, the Los Angeles County Board of Supervisors approved a proposal by Supervisor Janice Hahn and co-authored by Supervisor Holly Mitchell which identifies funding to launch a pilot program to eliminate medical debt for some struggling LA County residents. The pilot program will use $5 million to eliminate hundreds of millions of dollars of debt. 

“No one should be driven into poverty because they got sick. But medical debt remains a huge problem in this country, and it can be devastating for families and their financial well-being,” said Hahn who has championed efforts to address medical debt for LA County residents. “Luckily for us, we have an opportunity to make a difference. We can purchase medical debt for cents on the dollar and eliminate this burden for tens of thousands of people for a small fraction of what they collectively owe. I think we have a moral obligation to seize this opportunity to help these LA County families.”

Medical debt is often bundled and sold at steep discounts to companies who profit off of collecting on that debt. Since 2014, the nonprofit Undue Medical Debt has leveraged donations to purchase medical debts much like a collection company would, but instead of trying to collect on the debt, they cancel the debt entirely.  On average, $1 can purchase and eliminate $100 of medical debt.

Under Hahn and Mitchell’s proposal, LA County will partner with Undue Medical Debt to launch a medical debt elimination pilot program specifically targeting lower income LA County residents.  The Department of Public Health estimates that with the up to $5 million identified today for the pilot program, LA County could eliminate $500 million of medical debt for 150,000 lower-income residents. 

“I’m proud that the County is taking steps to help remove the weight of medical debt that strains countless families’ finances, stability, and health. This initial investment of $5 million towards eliminating crippling medical debt will significantly help our most vulnerable residents, many of whom have chronic illnesses and are struggling to pay huge out-of-pocket expenses,” said Supervisor Mitchell, representing the Second District. “I want to thank the Department of Public Health for collaborating with community and hospital partners to implement this pilot program. I look forward to its transformative impact on our communities.”

In addition to identifying funding, the approved motion allows the Department of Public Health to enter into an agreement with Undue Medical Debt to design and execute the pilot program. Details regarding the pilot program, partnerships with the hospital association and other key stakeholders, and the timeline will be worked out and announced in the coming months. Once the medical debt pilot program is completed, the Department of Public Health will report back to the Board on its effectiveness and potential scalability. 

“I want to express my gratitude to the Board of Supervisors for their commitment to this important initiative,” Barbara Ferrer, PhD, MPH, MEd, Director, Los Angeles County Department of Public Health. “By launching this pilot program to eliminate medical debt for an estimated 150,000 residents and working in partnership with community organizations, health care providers, and health plans to prevent continued accumulation of debt, Los Angeles County is seeking to advance equity and compassion for those who are in need of care. This effort is about more than alleviating financial stress—it is about removing barriers to health that disproportionately affect residents in many communities.”

Medical debt exceeds $2.9 billion for LA County residents, impacting one in ten adults in 2022 and disproportionately affecting families with children, lower-income, Latino, Black, American Indian, and Pacific Islander residents, and people with chronic health conditions. Medical debt has been shown to impede patients’ ability to access necessary healthcare and treatment, creating a cycle of health and financial hardship which affects employment stability, housing security, and overall quality of life.   

This pilot program is part of a larger strategy being developed by Los Angeles County to reduce the burden of medical debt. Last October, the Board approved a motion by Hahn and Mitchell directing County Departments to take initial action, research existing strategies, and report back with recommendations for further policies that can reduce medical debt in Los Angeles County. In response to this motion, County Departments began working with the Medical Debt Coalition on potential strategies to prevent and reduce medical debt for LA County residents culminating in the LA County Medical Debt Summit held in April.

At this summit, stakeholders and experts came together to outline a collective approach to eliminate the burden of medical debt, which includes County interventions, provider engagement, community action, legislative advocacy, data collection, operational improvements, and expanding consumer resources.  One key strategy pushed at the summit and in the Department of Public Health’s subsequent report back was a targeted pilot program for medical debt relief. In a letter to the attendees of the Medical Debt Summit, Vice President Kamala Harris also highlighted the Biden Administration’s support of the cities and states that relieved billions in medical debt for millions of Americans.