Your cart is currently empty!
Los Angeles County Erases $180 Million in Medical Debt for 39,000 Residents
Envelopes are landing in mailboxes across Los Angeles County carrying news most recipients never expected to receive. Inside, letters from county officials and a national nonprofit organization deliver a message that sounds too good to be true in an era of mounting financial pressure and crushing healthcare costs.
Contents
show
Open them. What’s inside could change everything about how thousands of families approach their future, their health decisions, and their ability to move forward from past medical crises. For 39,000 residents, December brings an unexpected gift that most people spend years trying to achieve on their own.
Second Wave Brings Relief to 39,000 More Residents
Los Angeles County announced Tuesday that it has permanently erased over $180 million in medical debt for more than 39,000 individuals as part of its Medical Debt Relief Pilot Program. Residents affected will receive official notification in the coming days from both the county and Undue Medical Debt, the national nonprofit administering the initiative.
But this represents only the latest chapter in a rapidly expanding relief effort. Since launching in December 2024, the program has now eliminated $363 million in medical debt for 171,000 residents across the county. An initial wave in May 2025 wiped out $183 million for 134,000 people, establishing the program’s ambitious scope and execution speed.
Barbara Ferrer, Director of the Los Angeles County Department of Public Health, frames the relief in human terms. “Financial strain too often limits people’s ability to focus on their health, their families, and their future,” Ferrer explained. “By lifting this burden, residents are able to make choices that support their health and well-being. No one should need to worry that taking care of their health needs can result in financial harm.”
How Five Million Dollars Buys Hundreds of Millions in Relief
County officials discovered a powerful leverage point in how medical debt functions in the American healthcare system. By purchasing qualifying debts from partnered hospitals, health systems, and collection agencies for a fraction of their face value, a relatively modest public investment produces outsized returns for residents in crisis.
An initial $5 million investment approved by the Los Angeles County Board of Supervisors created the foundation for the program. Because medical debt typically sells for pennies on the dollar in secondary markets, that investment translates into hundreds of millions in face value debt elimination. L.A. Care Health Plan contributed an additional $2 million to the effort, while the L.A. County Medical Association provided another $1 million, bringing the total investment to $8 million.
County officials project that this $8 million will eliminate approximately $800 million in medical debt for nearly 200,000 residents. By working within existing debt markets rather than fighting them, the program achieves relief at scale that would be impossible through traditional payment assistance or subsidy programs.
Supervisors Janice Hahn and Holly Mitchell authored and championed the Board action that established the initiative and secured initial funding. Both supervisors emphasized that the program represents more than financial engineering. Hahn characterized it as the government fulfilling its proper role. “If you get a letter in the mail from LA County and Undue Medical Debt, open it. We’ve eliminated medical debt for thousands more residents, with no strings attached. This is real relief for people who need it,” Hahn said.
Mitchell connected the relief to deeper questions about healthcare access and family stability. “Medical debt should never stand between our residents and the care they deserve. This newest wave of relief, more than $180 million, represents more than numbers on a page; it’s about lifting a burden that has held families back,” Mitchell explained.
No Application Necessary, No Strings Attached
Unlike most government assistance programs, recipients cannot apply for this relief. Recipients cannot even request it. Eligibility determinations happen automatically based on income levels and debt burdens, with no paperwork required from residents who qualify.
Two pathways lead to automatic debt forgiveness. Residents with household income at or below 400% of the federal poverty level qualify for relief. Separately, residents whose medical debt equals 5% or more of their annual income also qualify, regardless of absolute income level. Any Los Angeles County resident meeting either threshold and owing debt to participating providers receives automatic relief.
Selected recipients discover their new status only when letters arrive confirming permanent debt forgiveness. Accounts close, collection calls stop, and credit reporting related to that specific medical debt ends. For families who have spent months or years managing payment plans, negotiating with collectors, or simply ignoring mounting bills they cannot address, the relief arrives without warning or prerequisite action.
785,000 Residents Carry Medical Debt Burden
Medical debt affects approximately one in 10 adults across Los Angeles County, totaling roughly 785,000 residents. County data shows total medical debt reached $2.9 billion in 2022, representing a $300 million increase from the previous year. Debt growth continues despite relatively stable insurance coverage rates, suggesting that insurance itself provides insufficient protection against healthcare costs.
Families facing medical debt confront impossible choices. Pay medical bills or buy groceries. Keep up with hospital payment plans or cover rent. Seek needed follow up care or avoid new debt. County officials recognize that these decisions extend far beyond short term financial pressure, shaping long term health outcomes and family stability across generations.
Debt collection adds its own damage. Aggressive collection practices can lead to wage garnishment, bank account levies, and liens on property. Even without formal collection action, medical debt damages credit scores, making it harder to secure housing, employment, or reasonable interest rates on necessary loans. Families carry the burden long after the medical crisis that created the debt has resolved.
Communities of Color Bear Disproportionate Weight
Medical debt does not distribute evenly across Los Angeles County’s diverse population. Low-income households, families with children, and communities of color face significantly higher rates of medical debt burden. Latinx, Black, American Indian, and Pacific Islander residents experience debt at levels comparable to chronic diseases like type 2 diabetes in terms of prevalence and impact.
Income disparities, employment patterns, insurance coverage gaps, and systemic barriers to charity care all contribute to unequal debt distribution. Residents in communities already facing health inequities often carry dual burdens of worse health outcomes and higher medical costs. Relief targeted at low income residents therefore serves health equity goals alongside financial stability objectives.
County officials designed the Medical Debt Relief Program with explicit attention to these disparities. By setting eligibility at 400% of the federal poverty level and including the 5% of income threshold, the program reaches working families who earn too much for many public assistance programs but lack sufficient resources to absorb unexpected medical costs.
Hospital Partners Join the Effort
Initial participating hospitals include Martin Luther King Community Hospital and Adventist Health White Memorial Hospital. Both institutions agreed to work with Undue Medical Debt to retire qualifying medical debt and close accounts for eligible residents. County officials continue expanding partnerships with additional local hospitals and health systems to grow the program’s reach.
Hospital participation requires coordination on data sharing, debt identification, and transfer processes. Facilities must identify qualifying debt within their accounts receivable or debt already sold to collection agencies. Agreement on debt purchase prices, timelines, and patient notification protocols all factor into successful partnerships.
As more hospitals join the program, relief extends to residents who received care at different facilities across the county’s sprawling healthcare landscape. Geographic coverage, specialty services, and emergency department utilization patterns all affect which residents benefit from each hospital partnership added to the program.
The Gap Between Relief and Total Need
Even at its ambitious $500 million goal, the Medical Debt Relief Program will address only about one quarter of the $2.9 billion in total medical debt held across Los Angeles County. Roughly three quarters of all medical debt will remain outstanding after the pilot program reaches full deployment.
Several factors limit comprehensive coverage. Some hospitals may choose not to participate. Debt held by out-of-county providers for Los Angeles residents cannot be addressed through county partnerships. Recent debt not yet sold to secondary markets falls outside the program’s purchase model. Residents earning above 400% of the federal poverty level with debt below 5% of income do not qualify, despite potentially facing significant hardship.
County officials acknowledge these limitations while maintaining that substantial partial relief serves residents better than waiting for a comprehensive solution. Eliminating $500 million in debt meaningfully improves life for 200,000 families, even as similar challenges persist for others. Program design prioritizes serving the most financially vulnerable residents first, accepting that universal coverage remains beyond current capacity.
Prevention Moves Alongside Relief Efforts
Los Angeles County published a model hospital financial assistance application in September 2025, accompanied by best practice recommendations and a report analyzing hospital assistance policies. Officials designed these resources to make financial aid more accessible and equitable before debt occurs, addressing root causes rather than only managing consequences.
Many eligible patients never receive charity care because they don’t know assistance exists, can’t complete complex applications, or miss narrow windows for applying. Hospitals differ dramatically in how they communicate financial assistance availability, screen patients for eligibility, and process applications. Standardizing and improving these processes could prevent debt from forming in the first place.
Assembly Bill 1312, signed in October 2025, moves California toward automatic screening rather than application-based charity care. Starting in July 2027, hospitals must presumptively screen patients for financial assistance eligibility. Eligible patients will receive help automatically rather than navigating paperwork or managing billing disputes. County officials are partnering with L.A. Care Health Plan and the Hospital Association of Southern California to develop implementation supports, ensuring hospitals meet new standards effectively.
Combined with direct debt relief, these prevention efforts aim to reduce both current debt burdens and future debt accumulation. Residents who avoid debt in the first place never face collection calls, credit damage, or impossible choices between healthcare and other needs.
What Recipients Should Know and Do
Residents receiving letters should recognize them as legitimate communications, not scams or marketing. Official notifications arrive jointly from Los Angeles County and Undue Medical Debt, confirming specific debt amounts and account closures. No response is required, and recipients owe nothing for the service.
Debt relief does not affect eligibility for other public programs or benefits. Relief is not considered taxable income at the federal or state level. Credit reporting bureaus should update records to reflect zero balances on affected accounts, though residents may need to monitor credit reports and dispute lingering inaccuracies.
For future medical bills, Los Angeles County maintains resources at publichealth.lacounty.gov/hccp/medicalDebt/ covering charity care applications, legal assistance, consumer counseling, and tips for dealing with billing and collections. Residents facing new medical costs can explore financial assistance before bills become debt.
Building Foundation for Healthier Financial Future
Ferrer emphasized how eliminating financial burden creates space for residents to focus on what matters. Families freed from debt collection can redirect energy toward health maintenance, children’s needs, and building stability. Removing financial consequences from healthcare decisions encourages residents to seek needed care earlier rather than delaying until crises require expensive emergency intervention.
Long term health outcomes improve when people can afford prescriptions, attend follow up appointments, and address chronic conditions proactively. Medical debt relief, therefore, functions as both financial assistance and public health intervention, recognizing that economic stability and physical health remain inseparably linked.
County officials view the program as establishing groundwork for more equitable healthcare access across Los Angeles County. By demonstrating feasibility, measuring impact, and building partnerships, the pilot creates a model that could expand or inform other jurisdictions facing similar medical debt crises.
As letters continue arriving in mailboxes throughout December, 39,000 more families discover that their financial past no longer controls their future. For residents who open those envelopes, the government has delivered something increasingly rare in American healthcare. Actual relief, no strings attached, no application required. Just a burden lifted and a fresh start granted.