Connecticut Gov. Says He Will Cancel Hundreds Of Millions In Medical Debt

Connecticut Gov. Ned Lamont (D) announced Friday that his administration is erasing hundreds of millions in medical debt for around 250,000 eligible residents, saying Connecticut will be the first to take such action at the state level.

“This is not something they did because they’re spending too much money. This is something where they got hit with a medical emergency. They should not have to suffer twice,” Lamont told ABC News, which first reported the news.

No one will need to apply for the debt forgiveness. Households will receive letters in the mail if they are eligible — if their medical debt equals 5% or more of their annual income, or if their annual income is under 400% of the federal poverty line, Lamont told CNN Friday. (That’s about $125,000 for a family of 4.)

The governor said that he would spend $6.5 million in federal funding that Connecticut received through the American Rescue Plan Act of 2021. The state will then work with a nonprofit that bundles the debt and then purchase it, often for pennies on the dollar.

“We’re getting a 100-to-1 return on this,” Lamont told CNN Friday. Based on that estimate, he said around $650 million would be forgiven, although some local news outlets reported the final amount could total as much as $1 billion.

New Jersey Gov. Phil Murphy (D) used a similar calculus last month when he spoke in favor of alleviating medical debt, saying that every dollar spent by the state can erase 100 times the amount in debt.

Certain municipalities, like New York City, have also launched similar initiatives to lift the burden of medical debt from their residents.

Lamont said his plan would give residents a chance to start building wealth in a state where around 1 in 10 residents have medical debt.

“It’s a debt that you had no control over,” he told CNN Friday. “It’s not like you overspent. You get hit by a health care calamity.”