Homegrown remedies: NC’s bold prescription for medical debt

Trailblazers for health care affordability 

Did you know that North Carolina has the fourth-highest percentage of people with medical debt in collections among all states? After a decade-long fight for Medicaid Expansion, which finally provided eligible North Carolinians with access to care at copays as low as $4, it is no wonder that, in 2022, 1 in 5 North Carolinians had medical debt in collections. As legislators debated expanding coverage to over 600,000 people who needed health insurance, North Carolinians found themselves making difficult decisions between medications, healthcare visits, and other financial obligations. 

Medical debt creates financial instability, which, over time, can lead to delayed diagnosis, worsening health conditions, and increased healthcare costs. However, after a unanimous vote in May 2023 in the North Carolina Senate, legislators passed the Medical Debt De-Weaponization Act, a policy aimed at providing peace of mind to everyday North Carolinians seeking affordable and quality healthcare. Although late to the party for Medicaid Expansion, North Carolina is leading the way as the nation’s first program to leverage Medicaid state-directed payment authority, encouraging hospitals to relieve historical medical debt and adopt future protections to prevent the accumulation of debt. On July 29, 2024, the U.S. Centers for Medicare and Medicaid Services (CMS) sealed the deal and approved North Carolina’s Medical Debt Relief Program.  

A critical juncture: What this policy means for North Carolinians

To understand the stakes, consider the experience of someone living in rural North Carolina before this policy took effect: It’s 2023, and you’re living in Martin County. You work part-time at a local grocery store and earn just enough to cover your rent, utilities, and groceries. Because North Carolina hasn’t expanded Medicaid yet, you find yourself in the coverage gap–a space where you don’t have employer-sponsored health insurance, and you earn too much to qualify for traditional Medicaid but not enough to afford private coverage comfortably. Not to mention, the nearest hospital just closed due to financial challenges. One day, you begin experiencing chest pains. Unfortunately, seeking out care isn’t easy. The nearest hospital is over 30 miles away, but out of caution, you still decide to visit the emergency room. Even though the doctors ruled out a heart attack, what’s on the other side of your emergency room visit is a series of medical bills and the stress that comes with medical debt. Not only does stress impact your overall well-being, but it also shifts your perspective on seeking care due to the fear of additional costs, as healthcare remains unaffordable for many in North Carolina. 

This step, while modest on paper, represented a critical juncture for communities burdened by medical debt. High rates of medical debt and aggressive collection practices characterized North Carolina’s healthcare landscape. Before the medical debt relief program, in some counties, at least 30% of all residents had medical debt in collections, impacting their financial stability and physical health. The counties in Eastern North Carolina are primarily affected. This program builds on the success of Medicaid Expansion by utilizing the state’s Medicaid program to incentivize hospitals to relieve medical debt, with many of those benefiting from the program being low- and middle-income North Carolinians who qualified for care under Medicaid Expansion. 

Medical debt relief is here and growing

What began as a bold idea is now a reality: as of July 2025, North Carolina has officially implemented its Medical Debt Relief Program and the impact has exceeded expectations. In just a few months, more than $6.5 billion in medical debt has been forgiven for over 2.5 million North Carolinians, transforming the financial future for individuals and families across the state. Letters confirming debt forgiveness have already reached thousands of residents, including letters from hospitals and Undue Medical Debt to notify eligible beneficiaries that their debts have been forgiven. 

This policy is more than a one-time fix. It’s a sustained strategy to remove barriers and prevent debt from accumulating in the future. Hospitals are now required to maintain transparent Medical Debt Mitigation Policies, prominently link them on their websites, and provide income-based discounts for inpatient and outpatient services. Payment plans must now be capped at 36 months, with any balance remaining after that timeframe automatically forgiven. 

And the work continues: the second wave of beneficiaries is already on the horizon. Beginning July 1, 2026, medical debt relief will extend further to include patients with incomes up to 300% of the Federal Poverty Level (FPL). Patients benefiting from the second phase of the medical debt relief program can expect: 

• Payment plans capped at 36 months with no change in the monthly payment amount; 
• All outstanding balances associated with payment plans where they have made payments for more than 36 months to be relieved; 
• Hospital to relieve all medical debt considered to be uncollectible, dating back to January 1, 2014, for any North Carolina resident not enrolled in Medicaid with incomes at or below 350% FPL or if their total medical debt owed to the hospital exceeds 5% of their annual income. 

North Carolina has redefined what’s possible when policy centers people–not profit. But this moment requires more than celebration. It demands vigilance. We cannot afford to take one step forward and three steps back. To build a future where affordable healthcare is the norm — not the exception — we need lawmakers to protect the progress we’ve made. That means defending Medicaid Expansion and continuing to advance policies like Medical Debt Relief that have changed lives across our state. 

The path forward depends on sustained action. Over the past two years, North Carolina has proven what’s possible when we prioritize access, equity, and dignity. We call on our policymakers to honor that momentum and ensure that every resident–regardless of zip code or income–can live free from the burden of medical debt and access the care they deserve. Going back on the promise of affordable healthcare is a burden our communities cannot afford to bear.