Research from the Urban Institute shows that 9% of Pennsylvanians have medical debt. Overall, the state owes $1.8 billion in medical debt.

But what if a quarter of that debt could vanish with a comparatively small investment?

Governor Josh Shapiro is touting a plan to invest $4 million to erase $400 million in medical debt.

How?

Health Care groups will sell outstanding debt to debt collectors for extraordinarily discounted rates. There are non profits, like RIP Medical Debt, who buy that debt and in turn, forgive all they’ve bought.

RIP Medical Debt says around 50% of American adults will avoid treatment to avoid costs; and that 50% cant afford an unexpected $500 bill. They also report that 2 out of 3 bankruptcies cite medical debt as a leading cause.

“The debt piles up and it makes it harder for people maybe to get approved for a car loan, or be able to buy a home or rent an apartment or to even get a job,” said Governor Josh Shapiro in a press event on Tuesday. "And let’s state the obvious here- no one chooses to have medical debt. No one chooses to undergo heart surgery or get a cancer diagnosis.”

For Pennsylvania, rural counties are the most impacted by this issue.
16% of residents in Bradford County have medical debt—that is the 4th highest rate in the entire state.

While Shapiro included the $4 million in his budget for this initiative, legislation to enact a debt program already exists. Representative Arvind Venkat’s Medical Debt Relief Act passed out of the PA House last summer with some bipartisan support (114-89).

This bill laid out standards for who would be eligible, targeting those with low income to receive debt relief.

Families making 400% of the Federal poverty limit or less would qualify; which is $60,240 a year for a single person or $124,800 a year for a family of four, according to a press release from the Governor’s Office.

Someone would also be eligible if their debt is at least 5% of their annual income.

With Shapiro’s numerous budget requests, negotiations in the following months will help determine if this proposal makes it to the finish line.