State Paying $4.5M Toward Medical Debt Program That Shields Recipient Hospitals, Debt Collectors

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Lansing — The state of Michigan has appropriated about $4.5 million toward a medical debt forgiveness program whose recipients — the hospitals and debt collectors paid with the funds — will not be disclosed to the state.

The state grant approved in the 2023 budget was given to Undue Medical Debt, a New York-based nonprofit that works to purchase medical debt across the nation by paying hospitals and debt collectors pennies on the dollar for the debt.

But the nonprofit allows the hospitals and debt collectors to remain anonymous, meaning the state of Michigan and a few other counties participating will receive reports with the names of the recipient organizations redacted.

The program was celebrated by Gov. Gretchen Whitmer in Detroit earlier this month, when the organization announced it had leveraged about $1.4 million so far from the state and three counties to purchase and forgive about $144 million in medical debt. Undue Medical Debt will receive about $13.6 million total under the grants already approved by county and state governments. And the Democratic-led Senate has another $5 million appropriation in its proposed fiscal year 2025-26 budget.

“Here in Michigan, we believe that being sick or getting hurt shouldn’t have to mean going broke,” Whitmer said earlier this month.

State Sen. Sarah Anthony’s office, which championed the $4.5 million medical debt forgiveness program, encouraged The News to speak to the Department of Health and Human Services for details on the administration of the grant when asked about the anonymity of the hospitals and debt collectors receiving state funds.

“It’s up to the relevant state department to administer the grant agreement with due diligence,” Anthony’s office said in a statement. “If there are ways to tighten up the language or policy moving forward to ensure greater transparency on this brand-new program, we are always open to having that conversation.”

Lynn Sutfin, a spokeswoman for the state health department, confirmed Undue Medical Debt submitted its first reimbursement request for $764,000 and that the request still is being processed. She declined to provide a copy of the request because it hadn’t been finalized for payment.

Daniel Lempert, a spokesman for Undue Medical Debt, said the company submits all invoices for purchases to its partners but redacts the names of the hospitals or debt collectors involved.

“In this case, the providers have chosen to remain anonymous,” Lempert said. “We sign NDAs with all debt sources, which is standard practice, and they choose to go public or not.”

James Hohman, director of fiscal policy for the fiscally conservative Mackinac Center for Public Policy, noted the anonymity of recipient organizations may hamper the state’s ability to fully assess the efficacy of the program and its goal of aiding individuals who have fallen through the cracks of social safety nets like Medicaid.

“If you can’t tell who’s benefiting from this grant, you don’t know whether it’s performing this function,” Hohman said.

The $1.4 million spent by Undue Medical Debt in the first quarter of 2025 — $764,000 of which was chipped in by the state — has purchased and forgiven about $144 million in debt affecting roughly 210,000 people, according to the organization.

The state has roughly 700,000 residents with medical debt, officials estimate.

Undue Medical Debt is set to receive about $13.6 million in total from the state and three counties — Kalamazoo, Oakland and Wayne — under grants approved by the governments. The Democratic-led Michigan Senate has proposed another $5 million in funding in its proposed budget.

Of the $13.6 million awarded to Undue Medical Debt, $4.5 million was appropriated through the state budget in 2023, $100,000 from Kalamazoo County government, $2 million through Oakland County and $7 million from Wayne County.

Oakland and Wayne counties did not return requests for comment regarding their understanding of how the spending is reported.

The press conference announcing the first quarter haul of $144 million in medical debt forgiven in Michigan was held in part to spread word to residents who may be receiving letters this month from Undue Medical Debt informing them that their medical debt was forgiven in the first quarter round.

“Understand that so many people are transient that they don’t get the letter,” said Wayne County Executive Warren Evans. “So there needs to be some looking back at your previous address and checking. It doesn’t mean we haven’t retired the debt. It just means you haven’t gotten the notice.”

The debt forgiveness program does not take applications.

To qualify for debt forgiveness, an individual must make less than four times the federal poverty level or have debts equal to 5% or more of their total income. Additionally, Undue Medical Debt has to have an agreement with the hospital, health system or debt collector who holds the debt to purchase and forgive it.

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