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Hobbs announces up to $30 million in taxpayer dollars aimed at tackling medical debt

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(The Center Square) – Arizona Gov. Katie Hobbs launched a program on Monday aimed at “buying back” medical debt with taxpayer dollars distributed by the federal government.

The program is called “Affordable Arizona: Tackling Medical Debt for Working Families” and it is a public-private partnership between the state of Arizona and RIP Medical Debt, a national nonprofit.

“This is an investment in our future,” Hobbs said in a news conference at the Executive Tower in Phoenix.

“Hard-working, middle-class Arizonans should not be forced to have those difficult kitchen table conversations because of medical debt from conditions they cannot control,” the governor added.

Arizona’s contract will provide up to $30 million in funds from the “American Rescue Plan Act,” which was federal money doled out to the states as part of COVID-19 relief. According to public contract records reviewed by The Center Square, $20 million will be the initial amount, and “overhead and administrative costs” could go up to 10%, meaning that $2-3 million could be used for purposes besides directly paying off medical debt.

“The not to exceed 10% paid to the Contractor for overhead and administrative costs was determined fair and reasonable as it is in alignment with the historical price data associated with similar programs implemented by other local governments,” the sole source determination document states.

RIP Medical Debt’s President and CEO Allison Sesso has regularly contributed to ActBlue and the Biden for President campaign, according to Federal Election Commission records.

The group then uses the money to buy out medical debt from institutions at a haggled rate, which they say could be a roughly $2 billion impact from that funding.

“At least 750,000, perhaps more than a million, will soon be informed that their medical bills are gone,” Jeff Smedsrud, who was in attendance on behalf of the nonprofit, said.

“Their fears of getting the health care they need when they need it will be diminished,” he continued.

In terms of who will benefit from the debt relief, it will apply to those who have 5% or more of their income going toward medical debt of those who make 400% or less of the Federal Poverty Level, which could be six figures in some cases.

At the news conference to announce the program, reporters raised legal concerns about if the contract violates the state’s gift clause, but Hobbs insisted that “counsel was really involved” in the deal-making process with RIP Medical Debt.

Governments around the country are allocating COVID-19 funds to target medical debt, The Center Square reported.

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