How to Start Fixing a Health-Care System That Creates Medical Debt

In 2022, as director of policy in the Office of Cook County Board President Toni Preckwinkle, I co-launched the Cook County Medical Debt Relief Initiative, the first publicly funded program in the United States to buy and cancel residents’ medical debt. By June 2025, the program had successfully abolished over $664 million in medical debt, benefiting 556,815 residents of Cook County, Illinois, so far. 

In the process, Cook County’s program has also produced data that illustrates the absurdity of the myths undergirding medical debt, documents the many ways people fall through the cracks of a fragmented and stratified insurance system, and reveals the bigger questions we need to be asking about ensuring universal access to quality health care.

In Part 1 of this two-part series, I dug into the medical debt crisis in the United States and the characteristics of the health-care system that creates and sustains that crisis. This installment looks at how local and state governments are applying those insights into real steps toward building a better health-care system.

Data from ongoing local and state medical debt cancellation efforts is shedding new light on the story of medical debt in America. For example, an Illinois Answers Project analysis of data from the first three years of the Cook County Medical Debt Relief Initiative found that

• 47 percent of individuals served had commercial or other health insurance coverage;
• 45 percent were self-pay or had unknown insurance status;
• 10 percent were covered by Medicare; and 
• 3 percent were covered by Medicaid. 

The fact that a majority of residents had insurance, and nearly half had commercial insurance, but still accrued medical debt illuminates the stark impacts the insufficient coverage allowed under our current fragmented insurance system has on patients.

The fact that a majority of residents had insurance, and nearly half had commercial insurance, but still accrued medical debt illuminates the stark impacts the insufficient coverage allowed under our current fragmented insurance system has on patients.

This analysis also found that at least 66 percent of residents whose debt Cook County canceled made less than 200 percent of the federal poverty level, a threshold that should have qualified them for free care based on the stated financial assistance policies at nearly every hospital system in the area. That means the Cook County program likely relieved debt that hospitals, including many nonprofit hospitals that receive substantial tax breaks, had publicly committed to never saddling their patients with in the first place.

Who benefits—or perhaps more precisely, who profits—from a system where having health insurance doesn’t protect patients from financial harm, and hospitals face no consequences for failing to abide by the requirements they’ve agreed to? Are these outcomes aligned with the goals of a system that exists for health and healing?

With these questions in mind, those of us interested in ending America’s medical debt crisis must channel the momentum around debt cancellation into a renewed focus on upstream solutions.

What Can We Do Now? Short-Term Fixes Can Pave the Way to Long-Term Solutions

In light of these real harms and unsustainable fallacies, solving the medical debt crisis must involve both short-term steps to eliminate it at the source and long-term steps to build a system—powered by the public sector—where medical debt cannot exist in the first place. 

Reorienting our health-care system is no easy task, and it is especially daunting in this political moment. Thankfully, organizers, researchers, and policymakers across the country are already showing us ways we can start.

1. Follow the money, from pricing to collection

As evidenced by the insights gained from Cook County’s Medical Debt Relief Initiative, the sources of medical debt are shrouded in opaque data on pricing, coverage denials, financial assistance, and collections practices, obscured by a blame game between hospitals, insurers, and middlemen like pharmacy benefit managers (PBMs) and collections agencies. State and local governments must leverage their authority to collect these data for both the employees they sponsor insurance plans for and their residents at large. Collecting and publicly reporting these data, through models like state all-payer claims databases, will provide researchers, organizers, and policymakers themselves the information needed to expose and correct system failures, and strengthen the public sector’s ability to take action.

We can also look to Los Angeles County, whichnow tracks and monitors medical debt as a public health threat, for a local government model. Spurred by work from the LA County Department of Public Health (DPH), the LA County Board of Supervisors approved an ordinance in 2023 to require acute-care hospitals to report data on their debt collection and financial assistance operations. The LA DPH now collects data on health-care facilities’ debt collection and financial assistance activity and uses its insights to issue public reports and inform policy change and advocacy as part of the LA County Medical Debt Coalition.

2. Champion public health-care providers and payers

Our public health insurance system (through programs including Medicare, Medicaid, and the Children’s Health Insurance Plan) and our public health-care provisioning (through public hospitals, federally qualified health centers, the Veterans Health Administration, and Indian Health Service) provide crucial lifelines for people in the short term and an essential foundation to build on in the long term.

As shown in data from Cook County’s Medical Debt Relief Initiative and substantial research, medical debt largely results from having insufficient private insurance coverage or having no coverage at all. 

Public provisioning and public insurance coverage can prevent patients from accruing medical debt they might encounter elsewhere, provide an essential counterweight to other profit-maximizing actors in the local health-care system, and show the benefits of increasing public power in health care.

Long before Cook County began canceling residents’ medical debt, it was (and still is) working to ensure affordable health care for residents by operating one of the largest public health systems in the country: Cook County Health (CCH). In 2012, as part of the ACA’s Medicaid expansion, CCH also began operating CountyCare, a top-rated, no-cost Medicaid health plan that is now the largest in the region.

Especially amid existential threats to our public institutions, those of us working on medical debt cancellation and prevention must explicitly link this fight with those to strengthen our public health-care systems.

3. Leverage public dollars to incentivize system-wide action

The responsibility to solve this crisis cannot fall on public health-care systems alone. States and local governments must find creative ways to ensure the public money fueling our entire health-care system—from Medicare and Medicaid funds to tax breaks for community benefits—is fully deployed in the public interest.

North Carolina provides an innovative example of leveraging public funds to spur nonpublic hospitals to take action to relieve and prevent medical debt. In July 2024, the state began using its state-directed payments under Medicaid to incentivize hospitals to relieve medical debt for eligible residents, establish protections against future debt accumulation, and prevent problematic debt collection practices. North Carolina’s initial success, with all eligible hospitals voluntarily participating, suggests a new lever to ensure public funds produce public benefit. Last month, North Carolina announced the program had surpassed its initial goal and eliminated $6.5 billion in medical debt on behalf of 2.5 million residents.

At Cook County, we knew medical debt cancellation was one of the most impactful ways we as a local government could leverage a onetime influx of federal emergency funds to directly address a severe challenge our residents face. But we also knew that a long-term strategy of relying on states and local governments to patch up the very end of our broken health-care system would be unsustainable and ineffective at solving the broader crisis of unaffordable health care in America.

The salience of the medical debt crisis and the popularity of cancellation efforts demand we rethink what we consider radical in our efforts to reorient our system toward care and well-being.

We can see other pathways to quality health care by looking at the health-care systems of our peer countries, which consistently achieve both lower spending and better health outcomes. Recognizing the fundamental necessity of and right to affordable and available health care, these countries leverage the power of their public sector to require or guarantee health-care coverage for their populations, set or negotiate price controls, and reduce fragmentation and administrative costs. With financing structures ranging from fully public to compulsory private insurance, they provide numerous examples for tackling the root causes of the medical debt crisis that cancellation programs currently seek to stem.

The salience of the medical debt crisis and the popularity of cancellation efforts demand we rethink what we consider radical in our efforts to reorient our system toward care and well-being. As we debunk central myths and ask hard questions, we must allow the answers we find to point us toward new paths for ensuring accessible care for all. Ideas that have often been labeled radical and far-fetched—from standardized health-care pricing and fair-share spending to robust public provisioning and a single-payer system that enables universal health care¹—are, in reality, the global norm. And they may be the most commonsense solutions to the dire challenges inherent to the system we’ve created.