After a routine trip to her mailbox, Dawn Daly-Mack almost threw away an important letter that she thought was junk mail.
"I opened it up and it said, 'Your medical bill has been paid,'" says Daly-Mack, 60, who lives in Gaston, in northeastern North Carolina. "I didn't believe it."
The letter turned out to be legitimate. Daly-Mack is one of about 2.5 million North Carolinians whose medical debt was erased under a new statewide agreement with hospitals. The hospital wiped away her $459 debt, dating back to a 2014 emergency room visit for a sinus infection.
"I was the only breadwinner in the family," says Daly-Mack, who was caring for her disabled husband and two teenagers at the time. "I was not able to pay the bill."
She was also working then as a nurse at the very same hospital trying to collect from her.
Erasing and preventing medical debt
All of the state's 99 hospitals agreed to stop collecting certain debts dating back to 2014. They also pledged going forward to automatically discount care for patients who qualify for financial assistance — without requiring them to apply. For a family of four, that means an annual income of less than $96,000 qualifies.
"I'm excited for the people of North Carolina," says Allison Sesso, CEO of Undue Medical Debt, a charity that uses donor money to buy and erase medical debt. "It pairs not just medical debt relief going backwards, but it fixes the upstream problems."
Hospitals worked with Sesso's team to identify who qualified for the relief and sent them letters.
For Kody Kinsley, the former secretary of health in North Carolina, the issue was personal.
"My second year of college, my father had a massive stroke," says Kinsley. He says that his mom was very anxious about how to pay for his care: "A key thought in her mind was, 'We don't have health insurance. Oh my God. We're gonna end up in debt.'"
Luckily, Kinsley figured out how to get a discount from the hospital.
Years later as health secretary, Kinsley heard similar stories from all over the state. Even after 675,000 people gained Medicaid coverage through the new expansion in 2023, people would tell him about the old medical debt they still carried.
"They had a forward path, but they were still wrestling with that backward," he says.
Kinsley crafted a plan to address that and prevent some patients from accumulating new debt. The state tied additional Medicaid dollars for hospitals to debt relief dating back to 2014 — the earliest date the state could have expanded the health insurance program. Hospitals also agreed to shift the burden of applying for financial assistance away from patients and automatically apply discounts.
"People can walk in the front door of a hospital in an [emergency] situation and not feel like they're taking both their health and their financial well-being at risk in that moment," Kinsley says.
A patchwork of state approaches to medical debt
Other states are taking action to tackle this $220 billion problem estimated to impact 1 in 12 Americans.
Arizona and New Jersey used state dollars to buy and forgive medical debt. Oregon and Illinois screen patients for financial assistance. Colorado and New York ban medical debt from credit reports. The federal government recently rolled back that same protection.
Heather Howard, director of Princeton University's State Health and Value Strategies program, is encouraged to see the flurry of actions but worries about how uneven the help is across the country.
"Your ZIP code is going to determine the protections you have," Howard says.
She thinks to make a dent in this problem, federal rules are necessary. Especially as President Trump's health care policies are expected to lead to 14 million more people without insurance.
"We shouldn't be talking about a static problem," Howard says. "This problem is going to grow."
The looming Medicaid cuts and more people without health insurance mean hospitals are bracing for more unpaid care. The North Carolina Healthcare Association, which represents hospitals, says those cuts could make "sustaining these efforts more challenging."
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