Facts 08/12/2025 22:27

Los Angeles County Erases $180 Million in Medical Debt for 39,000 Residents

Across Los Angeles County, residents are opening envelopes containing news most of them never imagined receiving. At a time when families are being squeezed by rising living costs, stagnant wages, and overwhelming healthcare expenses, these letters deliver a message that feels almost impossible to believe.

The enclosed notice—sent jointly by county officials and the national nonprofit organization Undue Medical Debt—holds information that could fundamentally reshape the way tens of thousands of families think about their finances, their health, and their future. For 39,000 residents, this December brings an unexpected gift that many people spend years, or even decades, hoping to achieve.

Second Wave Brings Relief to 39,000 More Residents

On Tuesday, Los Angeles County announced that it has permanently erased more than $180 million in medical debt for over 39,000 individuals. This comes through the county’s Medical Debt Relief Pilot Program, an initiative designed to eliminate burdensome healthcare debt for residents who meet qualifying criteria. Official notifications will continue arriving in the coming days.

This newest effort marks the continuation of an ambitious and rapidly expanding program. Since it launched in December 2024, the county has now wiped out $363 million in medical debt for 171,000 residents—a number that continues to grow. A major wave of relief was issued in May 2025, when $183 million was cleared for 134,000 people, signaling both the program’s momentum and scalability.

Barbara Ferrer, Director of the Los Angeles County Department of Public Health, emphasized the deeper human impact behind these numbers.
“Financial strain too often limits people’s ability to focus on their health, their families, and their future,” Ferrer said. “By lifting this burden, residents can make choices that support their health and well-being. No one should need to worry that taking care of their health needs will result in financial harm.”

How Five Million Dollars Becomes Hundreds of Millions in Relief

County officials realized that the structure of the American medical debt market created an extraordinary opportunity. Medical debt that patients cannot pay is often sold by hospitals and health systems for just pennies on the dollar to private debt collectors. By intervening in this secondary market, the county can purchase—and immediately forgive—large amounts of debt at extremely low cost.

The Board of Supervisors approved an initial $5 million investment, forming the foundation of the program. Additional contributions from community partners expanded its reach:

L.A. Care Health Plan: $2 million
L.A. County Medical Association: $1 million

With $8 million total, the county estimates it will erase approximately $800 million in medical debt—an astonishing tenfold return on investment, made possible by the nature of debt pricing.

Supervisors Janice Hahn and Holly Mitchell, who spearheaded the Board action, stressed that the initiative isn’t merely a clever financial maneuver—it’s a reflection of government responding to urgent community needs.
Hahn urged residents to take the letters seriously:
“If you get a letter from LA County and Undue Medical Debt, open it. We’ve eliminated medical debt for thousands more residents, with no strings attached.”

Mitchell highlighted the role of medical debt as a barrier:
“Medical debt should never stand between our residents and the care they deserve. This relief is about lifting a burden that has held families back.”

No Applications, No Paperwork, and No Strings Attached

One of the most groundbreaking features of this relief program is the absence of an application process. Residents cannot apply, request consideration, or submit documents. Everything happens behind the scenes.

Eligibility is determined automatically using two criteria:

Household income at or below 400% of the federal poverty level, OR
Medical debt equal to 5% or more of their annual income, regardless of how much they earn.

Any Los Angeles County resident who meets either criterion and owes qualifying debt to participating providers will have their debt automatically forgiven.

Most recipients only learn about their eligibility when they open the letter telling them the debt is gone. Collections stop, accounts close, and credit reporting related to the forgiven debt is removed or corrected. For families who have spent months juggling payment plans or years ignoring bills they cannot afford, the relief arrives without effort, shame, or judgment.

The Scale of the Problem: 785,000 Residents Carry Medical Debt

Roughly one in every ten adults in Los Angeles County carries medical debt—an estimated 785,000 people. The total debt reached $2.9 billion in 2022, a $300 million increase from just one year earlier. This growth continues despite stable insurance coverage rates, revealing how inadequate many insurance plans are when it comes to covering actual healthcare costs.

Families dealing with medical debt face impossible choices:

Pay down medical bills or buy groceries
Keep up with hospital payment plans or pay rent
Attend follow-up care or avoid treatment to prevent new debt

These decisions deeply affect long-term health outcomes and family stability. Meanwhile, aggressive collection tactics can lead to wage garnishment, bank levies, property liens, and lasting credit damage—barriers that often remain long after the medical crisis has passed.

Communities of Color Carry a Disproportionate Burden

Medical debt is not evenly distributed. It falls hardest on:

Low-income households
Families with children
Latinx, Black, American Indian, and Pacific Islander communities

These groups simultaneously face higher rates of chronic illness and lower access to preventive care, creating a cycle of both illness and financial hardship. Insurance gaps, employment conditions, and unequal access to hospital charity care further intensify the problem.

The Medical Debt Relief Program was designed with these disparities in mind. By adopting income thresholds that include working families often excluded from traditional aid programs, the county aims to bring relief to those most affected.

Hospitals Partnering to Expand the Program

The program currently works with several health systems, including:

Martin Luther King Community Hospital
Adventist Health White Memorial Hospital

These hospitals identify qualifying debts and collaborate with Undue Medical Debt to transfer and retire those accounts. More hospital partners are expected, which will broaden the program’s reach across the county’s diverse and widespread healthcare network.

Partnerships involve complex coordination, including data review, account identification, and verification processes. The more hospitals that participate, the more residents receive relief.

A Significant Program—But Still Only a Fraction of Total Need

Even with its ambitious goal of eliminating $500 million in debt, the pilot program will address only about one quarter of the county’s total outstanding medical debt. Several limitations prevent full coverage:

Some hospitals may opt out.
Out-of-county providers cannot participate.
Recently incurred debt remains ineligible for resale.
Households earning above the income threshold may still struggle despite not qualifying.

County leaders argue that partial relief is far better than waiting for a perfect solution. Freeing 200,000 families from medical debt is a meaningful step forward in a system that has long left patients bearing the financial consequences of medical care.

Prevention Measures Aim to Reduce Future Debt

Recognizing that eliminating existing debt addresses only part of the crisis, the county also introduced reforms aimed at preventing future debt accumulation.

In September 2025, Los Angeles County released:

A model hospital financial assistance application
Best practice recommendations
A comprehensive report on hospital aid policies

These tools help ensure patients receive charity care before their bills become debt.

Furthermore, Assembly Bill 1312, signed in October 2025, shifts the state toward automatic screening for hospital financial aid starting July 2027. Instead of requiring patients to navigate complicated paperwork, hospitals must identify eligible patients proactively.

This shift could dramatically reduce medical debt long-term by ensuring that financially vulnerable patients receive assistance at the point of care.

What Recipients Should Know

For those receiving letters:

The notices are legitimate.
The relief is permanent, with no repayment or response required.
Forgiven debt is not taxable.
Credit reports should update automatically, though monitoring is recommended.

The county also provides resources for dealing with future medical bills, including charity care guidance, legal aid, and tips for managing medical collections.

A Foundation for a More Stable Future

Director Ferrer notes that removing financial barriers allows families to redirect energy toward health, education, and long-term stability. When people aren’t terrified of medical bills, they seek care earlier, attend follow-up visits, and manage chronic illnesses more effectively.

The Medical Debt Relief Program is not just a financial intervention—it’s a public health strategy. By demonstrating that large-scale relief is possible, county officials hope to inspire similar programs nationwide.

For the 39,000 families receiving letters this month, the results are immediate and profound:
A burden lifted. A chapter closed. A fresh start granted—no strings attached.