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Gov. Phil Murphy announced an initiative Tuesday eliminating $100 million in medical debt for nearly 50,000 New Jerseyans.

The debt abolishment is the result of the state’s partnership with Undue Medical Debt. It leverages more than $550,000 in American Rescue Plan funds.

Undue works with hospital systems to purchase large, bundled portfolios of past-due medical debt belonging to those least able to pay. Instead of collecting, Undue erases the debt. In New Jersey, the organization worked with Prime Healthcare and other state-based health care providers to identify unpaid medical debts that qualify for erasure.

The effort will provide:

• Relief for 17,905 New Jersey residents who owed $61.6 million to Prime Healthcare hospitals
• Relief for 31,748 residents owing more than $38.4 million to other providers through the secondary debt market (primarily collection agencies)

Finding financial – and emotional – relief

“Medical debt accumulates very quickly and can follow a person for decades,” said Murphy. “With this strategic investment and our partnership with Undue, we are wiping the slate clean for thousands of New Jersey families, eliminating their debt, and making a real, tangible impact on their lives. Today’s announcement continues our momentum in creating a better, more affordable and accessible health care system for all New Jersey residents.”

“As the leader of a nonprofit based in the tri-state area, it’s thrilling to see this magnitude of medical debt relief for New Jersey residents across the state,” said Allison Sesso, CEO and president of Undue Medical Debt. “We hope the tens of thousands of recipients in this first wave of medical debt relief are encouraged to re-engage with the health care system and feel both financial and emotional relief. No one chooses to get sick, be in an accident or have a chronic illness and we look forward to helping even more people over the course of this partnership with the New Jersey government.”

“We are thrilled to join into this partnership which furthers our mission of ‘Saving Hospitals, Saving Jobs, Saving Lives,’” said Dr. Sonia Mehta, CEO Region II, corporate chief medical officer and chief academic officer for Prime Healthcare. “We commend Gov. Murphy’s leadership and are proud to team up with Undue Medical Debt on this initiative that will relieve crippling medical debt for so many patients, many of whom are vulnerable – while providing exceptional, compassionate care to all members of the community.”

Ongoing efforts

The Murphy administration notes the announcement follows last month’s signing of the Louisa Carman Medical Debt Relief Act. Named after a Murphy staffer who tragically lost her life in a car crash earlier this year, the new law:

• Safeguards New Jersey families from accumulating medical debt;
• Protects against predatory medical debt collectors; and
• Prohibits the reporting of medical debt to credit reporting agencies.

“Today’s announcement will lift the burden of medical debt from tens of thousands of N.J. residents and families, and with the governor’s signing, just last month of the Louisa Carman Medical Debt Relief Act, more New Jerseyans are shielded against the unfair consequences of credit reporting of medical debt, among other protections,” said Shabnam Salih, director of the Office of Health Care Affordability and Transparency.

Those benefiting from the relief will receive an Undue branded letter in the mail.

In case you missed this initiative:

In July, the Murphy administration announced the launch of RetireReady NJ, a state-administered retirement savings program for private sector workers. Click here to read more.