PHOENIX, Ariz. — In a sweeping move to address the growing crisis of medical debt, Governor Katie Hobbsannounced Tuesday that $429 million in medical debt has been eliminated for more than 352,000 Arizonans. The initiative, made possible through a partnership between the state and the national nonprofit Undue Medical Debt, is part of a larger commitment to expand opportunity and promote financial security for working families.
“This is about restoring the Arizona Promise — that everyone, regardless of income or circumstance, deserves the opportunity to thrive,” Governor Hobbs said. “Medical debt undermines dignity, derails futures, and traps families in financial instability. By eliminating this burden, we’re opening doors to economic freedom and allowing Arizonans to live full, healthy, and productive lives.”
No Application Needed — Relief Is Automatic
Last year, Governor Hobbs announced a broader plan to erase up to $2 billion in medical debt across the state. This latest relief represents the first major milestone of that plan. Utilizing funds from the American Rescue Plan Act (ARPA), the state enabled Undue Medical Debt to purchase unpaid hospital and provider bills at steep discounts and cancel the remaining balances entirely — all without requiring an application from beneficiaries.
Eligible residents include those earning 400% of the federal poverty level or less, or those whose medical bills exceed 5% of their annual income. Those receiving relief will get a branded letter in the mail from Undue Medical Debt confirming that some or all of their debt has been forgiven.
Arizona’s Medical Debt Crisis
The scale of medical debt in Arizona is massive, with estimates placing the total burden at $2.4 billion. For many, this debt can mean putting off critical healthcare, damaging credit, and losing access to job opportunities or housing. Officials say the relief effort is designed not only to erase debt, but also to reverse the ripple effects of financial hardship that come with it.
Letters confirming the cancellation of debt have already begun arriving in mailboxes across the state, with more expected in the coming weeks.
Voices from Across Arizona
For many, the debt forgiveness brings immediate and emotional relief. Charity, from Scottsdale, shared:
“I figured my medical debt would stay with me forever. When I received the letter saying it was paid in full, I couldn’t have been more thankful. This is a huge help, especially right now with my dad in hospice. Thank you from the bottom of my heart.”
Jordan, a self-employed father from Surprise, expressed similar gratitude:
“Raising four kids brought a lot of unexpected costs, especially with health issues and unreliable insurance. This relief from Undue Medical Debt is a blessing. It gives us a chance to finally get ahead.”
Corina, a caregiver in Phoenix, described how the debt had become suffocating:
“I’ve been balancing work and caring for my disabled mother for years while trying to manage overwhelming medical bills. When I opened the letter saying my debt was gone, I felt like I could breathe again. It lifted such a heavy weight off my shoulders.”
A National Model for Reform
Undue Medical Debt’s CEO, Allison Sesso, praised Arizona’s bold approach:
“This partnership shows what is possible when government leaders choose compassion and action. Medical debt doesn’t just hurt individuals — it weakens communities. Arizona’s investment in this program shows a deep commitment to ensuring people aren’t financially punished for getting sick or needing care.”
The medical debt cancellation effort is part of a broader campaign by the Hobbs administration to enhance economic opportunity, promote health equity, and ensure that no one is forced to choose between medical care and financial survival.
Governor Hobbs concluded, “We are not just eliminating debt — we’re restoring peace of mind and reaffirming our shared belief that no Arizonan should suffer financially simply because they needed healthcare.”
