About 77,000 patients with unpaid bills at one of New Jersey’s largest hospital systems will have their bills forgiven almost entirely under a plan announced Tuesday by Gov. Phil Murphy.
Murphy and the national nonprofit group used $900,000 in federal taxes to pay off $120 million in medical debt owed to Atlantic Health System, which operates seven hospitals across the state, including its flagship Morristown Medical Center. This is the second large medical debt payment in two months.
The move “protects residents from accumulating debt and eliminates existing debt, so New Jerseyans can focus on what matters most: their health,” Murphy said in a statement.
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Atlantic Health officials did not immediately respond to questions Tuesday morning.
How it works
Because medical debt is often huge and very difficult to collect, some providers sell the debt for pennies on the dollar.
Undue, a nonprofit group based in New York, negotiates contracts with hospital systems across the country. It buys large amounts of medical debt that often belongs to people least able to repay and liquidates the debt.
Murphy has made tackling medical debt a priority this year, saying it can cripple family finances and prevent low- and middle-class residents from moving up the social ladder.
In January’s State of the State address, Murphy said he would use $10 million from the American Rescue Plan fund — the $1.9 trillion federal stimulus bill passed by Congress in 2021 — to pay off those bills.
Murphy has already spent nearly $1.5 million, including $550,000 in August, resulting in the loss of about $100 million in unpaid bills for 50,000 Prime Healthcare patients. This national, for-profit chain operates five hospitals in North Jersey, including St. Mary’s General in Passaic and St. Claire’s in Denville and Dover.
Who qualifies?
Eligible people have debts of 5% or more of their annual income or income no more than four times the federal poverty level, which would be about $60,000 for an individual this year.
This time, payments are focused solely on patients with unpaid bills from Atlantic Health. In addition to Morristown, Atlantic Health operates Chilton Medical Center in Pompton Plains, Newton Medical Center, Overlook Medical Center in Summit, CentraState Medical Center in Freehold and more.
There is no application process. People whose debt will be reduced or forgiven will receive a letter from Undue by post from Thursday.
What are the effects in New Jersey?
In recent decades, New Jersey’s health care industry has exploded as former community hospitals have evolved into large, diversified research centers with a mission to keep New Jerseyans from seeking care in New York and Philadelphia.
But this ambition comes at a price. New Jersey has some of the highest health care costs in the nation, ranking 11th, with the average resident paying over $11,000 a year. It also has some of the highest medical costs, with admitted patients averaging $3,157 in expenses per day.
Even though the state ranks high in per capita income and only 6.8% of residents were uninsured in 2022, approximately 11% of New Jersey residents have medical debt that has gone to a collection agency. According to the nonprofit Urban Institute, about 11% of minorities were uninsured and 16% had medical debt.
This article originally appeared on NorthJersey.com: 77k. New Jersey will have medical debts forgiven. Are you eligible?
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