By The Epoch Times | Created at 2026-09-17 19:56:45 | Updated at 2026-09-17 20:34:19
48 minutes ago
Kentucky Governor Andy Beshear (D) signed an executive order Tuesday that sends $2.5 million to a national nonprofit to erase an estimated $250 million in medical debt for more than 130,000 Kentuckians.
The order created the Team Kentucky Medical Debt Relief Program and directs funds to Undue Medical Debt, which buys medical debt from participating hospitals and collection agencies and cancels it for a fraction of its cost. The governor’s office said the arrangement results in $100 of debt erased for every $1 the state spends.
“Medical debt isn’t a choice. It’s what people are faced with after a serious accident, a serious illness, a cancer diagnosis, and more,” Beshear said at a press conference announcing the order.
“It’s bad enough to face the pain that comes with those challenges, let alone being burdened by extreme costs that cripple families for years, if not a lifetime.”
To qualify, Kentucky residents must owe at least 5 percent of their annual income in outstanding medical bills or earn at or below 400 percent of the federal poverty level, which the governor’s office put at about $100,000 for a family of three.
There is no application process, and residents can’t request relief. Those who qualify will get a letter from the state and the nonprofit listing which debts were erased and from which creditors.
The first 46,000 Kentuckians will have up to $100 million in debt erased, with letters going out starting next week. Beshear said the debts erased in that first round range from $1 to $600,000.
“We hope this relief encourages Kentuckians to re-engage with the healthcare system,” Courtney Werpy Story, Undue Medical Debt’s vice president of government initiatives, said in a statement.
According to the governor’s office, Undue Medical Debt has erased more than $49 billion in debt nationwide. The nonprofit has announced similar programs this summer with Arizona Gov. Katie Hobbs, Michigan Gov. Gretchen Whitmer, and Connecticut Gov. Ned Lamont, all Democrats.
The order directs the state Finance and Administration Cabinet to transfer the money and cites Beshear’s authority under Sections 69 and 81 of the Kentucky Constitution. Asked where the money came from, Beshear said it was already in the state budget for housing.
“These are dollars that were within the state budget. There was an overall $5 million pot to help Kentuckians and, in one part of that, to help them be able to afford housing,” Beshear said.
“This is going to improve the credit scores of at least 20,000-plus Kentuckians that will give them that opportunity that right now they might be able to afford but can’t qualify for that loan because of what medical debt has done to their credit scores … [so] the two connected,” he added.
State Sen. Robby Mills, a Henderson Republican, told the Kentucky Lantern that the redirected funding wasn’t what the legislature intended with that appropriation.
“I would even venture to say he knows that that wasn’t the intent,” Mills said.
The Epoch Times did not receive a response from Mills’s office or the Republican Party of Kentucky to requests for comment.
A 2024 National Bureau of Economic Research working paper co-authored by Stanford economist Neale Mahoney studied the nonprofit’s model. It found no evidence that, on average, buying and forgiving medical debt in collections improved recipients’ finances, access to credit, or physical or mental health.
Recipients were also less likely to pay their existing medical bills afterward, although credit scores rose for people whose debts had been on their credit reports.
“We are not saying with this study that medical debt relief doesn’t help people,” Mahoney said at the time.
Undue Medical Debt president and CEO Allison Sesso responded at the time that the study looked at the group’s work from 2018 to 2020. She said the nonprofit has since raised eligibility to four times the federal poverty level and started buying debt directly from hospitals so it can be erased sooner.
