North Carolina Erases $6.5 Billion in Hospital Medical Debt for 2.5 Million Residents

North Carolina wiped out more than $6.5 billion in hospital medical debt for about 2.5 million residents through the Medical Debt Relief Program. New data from the state Department of Health and Human Services shows this. All 99 acute care hospitals in the state joined the initiative.

The program uses Medicaid funds to pay back participating hospitals in exchange for wiping out existing debt and putting in place reforms to keep patients from building up new bills. The relief covers unpaid hospital bills going back to 2014.

Mecklenburg County has seen the most relief. Atrium Health and Novant Health wiped out more than $1 billion in patient debt there. ECU Health Medical Center in Pitt County got rid of about $585 million in debt for roughly 270,000 people. Forsyth County hospitals have provided over $500 million in debt relief, while Wake County has seen just over $100 million.

The program targets Medicaid patients and lower-income families. Hospitals must forgive all hospital debt for Medicaid patients going back to 2014. They must also wipe out older hospital debt for patients with incomes at or below 350% of the federal poverty level, or those whose hospital debt is more than 5% of their income.

Those at or below 350% of the federal poverty level include a single adult making under roughly $50,000 a year. A family of four making under about $100,000 qualifies too. The relief applies to bills more than two years old.

Jonathan Kappler, deputy secretary for external affairs at the state's Department of Health and Human Services, said hospitals are working with Undue Medical Debt to find eligible patients and wipe out what they owe. The group helps hospitals flag qualifying accounts. Then they send letters telling people that their debt has been forgiven.

"This is probably the bulk of the relief we'll see," Kappler said, per The News & Observer. "But more is expected over the next year — and many hospitals jumped on this quickly."

Some hospitals have expanded the relief to cover patients at 400% of the federal poverty level, above the state's 350% threshold, Kappler said. Hospitals report progress twice a year. The latest update turned in in late September. The next comes due in the spring.

The program also requires hospitals to put in place new policies to prevent future debt. That includes applying discounts based on income or enrollment in government food benefits programs such as SNAP or WIC without patients asking. It bans the sale of medical debt owed by many patients. It ends the reporting of medical debt to credit agencies.

Hospitals receive boosted payments through the state's Healthcare Access and Stabilization Program, or HASP, which was created when the state expanded Medicaid in 2023. Hospitals qualify for boosted HASP payments only if they wipe out eligible medical debt and strengthen their charity-care and billing practices.

The One Big Beautiful Bill, a federal law passed earlier this year to put in place President Donald Trump's agenda, makes several changes to Medicaid. This includes placing limits on how states use payment programs like HASP to draw down extra federal funding. Kappler said the federal reconciliation law will cut off the mechanism the state is using to require debt forgiveness and charity-care protections.

The state will lose that leverage "a few years down the road," Kappler said. The retrospective debt relief will be done by then. But once the changes take effect, the state will no longer be able to force hospitals to keep up the new charity-care standards.

Kappler said he is "confident" hospitals will continue those policies on their own because they have seen "the value of this for themselves and for their communities."