(The Center Square) – Cook County and state of Illinois officials gathered Thursday to announce roughly $1.4 billion in medical debt has been cancelled through both a state and local program for Illinois residents, but studies show that such programs may not always be beneficial.
Illinois taxpayers footed the $10 million bill to cancel the debt of about 694,000 residents, with the program costing pennies on the dollar for the state to purchase medical debt that is either about to or already has been sent to a collection agency.
Gov. J.B. Pritzker, who proposed the statewide program based on Cook County’s two years ago, celebrated the erasing of debt by the state.
“The average recipient had nearly $1,600 of debt canceled. One Illinoisan received $900,000 in relief. In 40 different Illinois counties, more than 5% of residents received relief from this program,” Pritzker said. “For example, nearly 22% of residents living in Kankakee County have benefited from this program.”
Pritzker also explained why he feels the program is impactful for the residents who have received a letter notifying them of their cancelled debt.
“Medical debt is a leading cause of bankruptcy. It impacts people’s ability to pay rent, their ability to put food on the table, or just to save for the future. It can ruin credit, limit financial opportunities, and cause years of uncertainty long after they leave the hospital,” Pritzker said.
But some research suggests the cancellation of medical debt may not be as impactful to assisting recipients financially.
Lead author on a 2024 National Bureau of Economic Research report, Neale Mahoney, said in a subsequent article explaining the interpretation of the study’s findings that most recipients of medical debt relief the study surveyed didn’t see an impact to their credit rating after debt was cancelled.
Mahoney attributed the general lack of impact to a “shift in the credit reporting environment,” as a lot of medical debt has stopped being reported to credit agencies in the first place.
He suggested programs like Illinois’ choose to specifically target people with debt that is impacting their credit first to have a stronger impact.
The study also found lackluster results in improving recipient’s payment of other existing medical bills.
The state program is conducted in partnership with the nonprofit Undue Medical Debt, which assists the state in finding and buying the medical debt of residents. Mahoney’s study was conducted with the nonprofit.
Em Brostek, a public relations manager for Undue Medical Debt, said the company’s approach was informed by the study and has since been adjusted to expand eligibility to anyone at 400% of the federal poverty level and providing relief recipients with other resources upstream of having other medical bills go unpaid.
Pritzker told reporters after the announcement that he wants the state to continue to find funds for the program, even as budgeting with the available state taxpayer funds becomes more difficult each year.
“I don’t know any other program that has that kind of return for people. So, it’s one that I really believe in. I mean, we’re going to have to work hard to find those dollars,” Pritzker said. “I’m hopeful that as we continue to identify debt that we can relieve, that we’ll be able to find the dollars in our state budget.”
