Forgiving medical debt is vital, but it won't fix our broken healthcare system

A New Approach to Medical Debt Relief in Michigan

A single ambulance ride can be enough for a Michigan family to face overwhelming debt. Many families find themselves burdened with thousands of dollars from a single night in the emergency room, often owed to hospitals they believed would offer assistance. Last week, Governor Gretchen Whitmer announced a new initiative aimed at alleviating this burden: $144 million in medical bills will be forgiven for more than 200,000 Michiganders. While this is a significant step forward, it’s important to recognize that debt relief alone isn’t a solution to the deeper issues within our healthcare system.

As a professor and researcher who has studied financial burden and medical debt, I’ve spent years examining who carries these burdens, how they affect people, and what actually works to prevent them. The truth is, while debt relief is a compassionate gesture, it only serves as a temporary fix. Without systemic reform, the problem continues to persist.

The Scope of Medical Debt

Medical debt is widespread and deeply entrenched. Nationally, as many as four in 10 adults carry some form of medical debt. This issue is a major driver of financial instability and often prevents people from seeking necessary care. Why? Because our current system is structured in a way that makes debt almost inevitable. High costs, inadequate insurance coverage, and inconsistent financial assistance policies leave many without viable options.

Even nonprofit hospitals, which are granted tax exemptions in exchange for serving the public, often fall short. According to the Lown Institute, Michigan’s nonprofit hospitals spent just 1.76% of their expenses on community benefit programs like charity care—among the lowest rates in the country. This leaves a significant gap in how well hospitals serve their communities.

Systemic Gaps in Care

These gaps are evident in patient experiences. The majority of Michigan hospitals rely on collection practices that can be financially devastating, such as lawsuits, wage garnishments, and credit reporting. Even when financial assistance policies exist, they’re often difficult to navigate or access. Many working families don’t qualify under current criteria or simply aren’t aware that help is available.

Governor Whitmer’s partnership with Undue Medical Debt offers temporary relief. Undue is a nonprofit that purchases old medical debt for pennies on the dollar and then cancels it entirely. While this approach is commendable, it operates within a flawed system where medical debt becomes a commodity. Even Undue’s CEO, Allison Sesso, has acknowledged that the goal is eventually to make such work unnecessary.

Addressing the Root Causes

The evidence surrounding debt relief is sobering. A 2024 randomized study tested the effects of forgiving medical debt that had already gone through billing and collections. The results showed a small increase in credit access and slightly fewer new bills paid—but no significant changes in mental health, physical health, healthcare use, or overall financial wellness.

Moreover, there are unintended consequences to consider. If debt forgiveness becomes routine, it may reduce incentives for both hospitals and patients to engage with financial assistance programs that could prevent debt in the first place.

Michigan must take bolder steps. States like North Carolina have shown the way with the 2023 Medical Debt De-Weaponization Act, which paired debt relief with systemic reform. This law requires hospitals to screen patients for financial assistance before collections begin, restricts medical debt from being reported on credit scores, and sets statewide standards for charity care.

Michigan should follow suit by requiring hospitals to automatically screen patients for financial assistance eligibility before billing or collections start. The state should also establish minimum standards for charity care, such as free care for households earning up to 250% of the federal poverty level and discounted care up to 400%. Harmful debt collection practices like wage garnishment and credit reporting should be banned, and hospitals must be more transparent about their billing policies and any participation in debt sales. Finally, better alignment between hospitals’ tax-exempt status and their actual community investments is needed, with clear expectations for giving back.

What You Can Do

While Governor Whitmer’s initiative will help real people, we shouldn’t mistake symptom relief for a cure. Until we address the causes of medical debt, Michiganders will continue to face this challenge—bill by bill.

Here’s what you can do: ask your hospital to publicly post its financial assistance policy. Contact your state representative and urge them to support stronger protections for patients. Encourage nonprofit hospitals to expand their community benefit programs to better serve the people in their communities.

A letter saying your debt is gone is a gift. A system that prevents that debt from happening in the first place—now that’s real peace of mind.