A New Solution to Medical Debt

Summary

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Advancing Health Podcast: "A New Solution to Medical Debt"

Date: April 8, 2026
Host: Molly Smith, American Hospital Association
Guests: Allison Sesso (CEO/President, Undue Medical Debt), Eva Sal (Policy Lead, Undue Medical Debt)

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Overview

In this engaging episode of Advancing Health, host Molly Smith sits down with Allison Sesso and Eva Sal from Undue Medical Debt to discuss the persistent and growing problem of medical debt in the United States. With one in four Americans burdened by some form of medical debt, the conversation covers both practical relief efforts and systemic policy challenges. The episode dives into how Undue Medical Debt works with hospitals to abolish debt, the limitations of current safety nets, and bold ideas for real, upstream solutions.

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Key Discussion Points & Insights

The Scope and Impact of U.S. Medical Debt

• Alarming Statistics:
  • "Seven in 10 U.S. adults say they receive medical bills they can't afford." (A, 00:00)
  • Over 15 million people have had $27 billion in medical debt relieved by Undue Medical Debt. (C, 01:32)
  • The national medical debt problem is estimated at at least $220 billion. (C, 04:27)
• Wide-Reaching Harm:
  • Beyond financial strain, medical debt burdens mental health and prevents many from seeking further necessary care. (C, 01:25; D, 02:54)
  • "Most people really want to pay their bills, but the gap between what they're expected to pay and what they actually have in resources is just way too wide and wider." (C, 04:27)

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How Undue Medical Debt Works

• Mission & Model:
  • A non-profit operating like a for-profit debt buyer—except instead of collecting, they abolish debt for people under 400% of the federal poverty level, or whose debt is ≥5% of their income. (C, 01:38)
  • Works with over 70 health systems and 300+ hospitals nationwide. (C, 01:17)
  • “We never ever collect a single penny from a patient. We would never do that.” (C, 01:48)
• Impact on Patients:
  • Eliminating debt provides relief, enabling patients to seek needed care again without fear. (C, 09:54)
  • Debt relief is targeted, often by ZIP code or community, aligning with donor intent. (C, 11:06)
• Process:
  • Works with hospitals after collections have failed, typically reviewing up to seven years of “bad debt” files.
  • Patients meeting criteria are identified through presumptive eligibility models and debt is purchased for pennies on the dollar—generating significant impact per donated dollar. (C, 08:57)
  • “$1 of a donation to us releases $100 on average of medical debt.” (C, 09:44)
  • Donors include churches, local governments, and others; nearly 30 government contracts completed or underway. (C, 11:20)

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Policy and System Challenges

• Coverage Gaps and Underinsurance:
  • Coverage is the best protection, yet even those with insurance are not safe due to high deductibles and cost-sharing.
  • “Underinsurance… means that people are spending more than 10% of their income on healthcare expenses.” (D, 06:48)
  • High-deductible and “bronze” plans in the ACA Marketplace increasingly fail to protect families—especially those on low and middle incomes. (B, 07:58)
• Upstream Solutions & Policy Recommendations:
  • Relief programs are essential, but “fundamentally what we're doing is not solving the problem of medical debt and its creation in the first place.” (C, 01:57)
  • “Financial assistance is not health coverage. And so we need to stop treating it like that…” (D, 14:02)
  • Increasing calls for robust policy change: access to affordable, comprehensive coverage for all. (D, 14:02)
• Policy Activity:
  • State-level reforms target aggressive debt collections (e.g., lawsuits, wage garnishments) and seek to better regulate financial assistance policies. (D, 12:00)
  • Concerns expressed over policies eroding coverage and the over-emphasis on price transparency as a "silver bullet" (which they argue, it is not). (D, 12:49)
  • Notably, bipartisan agreement exists around limiting extraordinary debt collection tactics.

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Notable Quotes & Memorable Moments

• On Underinsurance:

  "When people walk through the door of a hospital or emergency room rather, and they have a $5,000 deductible, but their earnings would in no way allow them to pay or meet that deductible... they're underinsured because their insurance is actually not serving them."
  — Eva Sal, (06:48)

• On Removing Medical Debt:

  “We focus on people that are 400% of poverty or below, or if the debt is 5% or more of their income... We never ever collect a single penny from a patient. We would never do that.”
  — Allison Sesso, (01:38)

• On Why Debt Relief Matters:

  “This removes that barrier to care that they want to see removed.”
  — Allison Sesso, (10:54)

• On Financial Assistance vs. True Coverage:

  “Financial assistance is not health coverage. And so we need to stop treating it like that.”
  — Eva Sal, (14:02)

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Solutions for Hospitals: Presumptive Eligibility

• What Is It:
  • Screening patients early—at the point of service—to determine likely eligibility for financial aid, streamlining access and reducing administrative burden. (D, 15:06)
  • Tools for presumptive eligibility reduce paperwork and ensure eligible patients get timely assistance before receiving large bills.
• Benefits:
  • “Offering a contactless and paperless option for patients.” (D, 15:44)
  • Helps hospitals efficiently allocate financial assistance, reduces friction for patients under stress, and improves outcomes.
• Resources:
  • The AHA and Undue Medical Debt offer additional case studies and guidance for hospitals looking to implement such programs. (B, 16:15)

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Important Timestamps

• Introduction to Guests + Mission of Undue Medical Debt: 00:13–02:54
• Scope of Medical Debt & Policy Issues: 04:04–07:58
• How the Relief Model Works in Practice: 08:57–10:58
• Policy Conversations and State Action: 11:44–13:26
• The Limits of Financial Assistance & Need for Coverage Reform: 14:02–14:45
• Presumptive Eligibility Solution for Hospitals: 15:06–16:15

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Conclusion

This episode of Advancing Health offers a compelling overview of America's medical debt crisis and insights into both immediate relief and long-term solutions. Through the experiences and passion of Allison Sesso and Eva Sal, listeners gain an understanding of the practicalities of debt relief, the day-to-day impact of underinsurance, and the urgent need for systemic reform. Hospitals and policy innovators alike are called to use data, empathy, and bold thinking to create a future where medical debt is no longer a barrier to care.

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Transcript

[A]

Welcome to advancing health. Seven in 10 U.S. adults say they receive medical bills they can't afford. In today's podcast, meet two experts who say the system just can't go on like this.

[B]

Hello, everyone. My name is Molly Smith. I am the group Vice president for public policy here at the American Hospital Association. And I am really pleased to have with me two leaders from Undue Medical Debt, Allison Sesso and Eva Sal, who are here to talk to us today a little bit about how undo medical Debt works, particularly how they work with hospitals and just their ideas about what we can do around the challenge associated with medical debt, both prevention and solutions once it occurs. So really excited to have them here with me today. So at this point, I would love to just actually turn it over to you both, Alison and Eva, and just please just kind of start by introducing yourselves.

[C]

Great. I'm so glad to be here. My name again is Allison Sesso and I serve proudly as the CEO and president of Undue Medical Debt. And we really have one mission. We're a nonprofit that relieves medical debt and our mission is to end medical debt. And we do that both by working directly with hospitals.

[B]

We've been able to work with over

[C]

70 unique systems with representing about 300 plus hospitals across the country buying medical debt. This is the bad debt portfolios that sit on their books that we understand. A lot of hospitals have written off and think that they're not creating any harm for patients. But what we've learned is that by getting rid of that debt, we are actually relieving a burden from people. Not only does it live in their mental health space, space in their heads, but it actually is something financially that is hurting them as well because they're always thinking about what they can be doing, how else they could be kept, figuring out how to pay that bill. And it creates a sense of overwhelm for them. So our, our mission really is to get rid of those debts for our patients. We've gotten rid of $27 billion of medical debt for over 15 million patients at this point. And that work just keeps growing. We work like a for profit debt buyer, except that when we get our hands on those debts, we relieve them. We never ever collect a single penny from a patient. We would never do that. We focus on people that are 400% of poverty or below, or if the debt is 5% or more of their income. And the reason why I brought Eva here today is because we understand that fundamentally what we're doing is not solving the problem of medical debt and its creation in the first place. And that is something we really like to do. We like to think about how we can be bolder and bigger in terms of making sure that our work absolutely is absolutely one day by solving this problem more fundamentally. And so I'll let Eva introduce herself.

[D]

Sure. And I actually was brought on to undo medical debt about three years ago. And I think it was really anchored in Alison's background in social services, but really a longer term vision for, for not just being a band aid for people in the moment, but really thinking about how we could influence policy upstream and mitigate the harms of medical debt. So with that, we really focus on listening to our patients. So we hear from patients. So Allison mentioned that we've abolished debt for over 15 million individuals and we hear from them. So we actually have an anthropologist that works for us and helps to listen to their stories and record them and find themes. So, so those are messages that we can take back both to our hospital partners, but also to policymakers that are interested in learning about that experience. And really the most harmful parts of medical debt, which include mental health, harm and stress, but also delaying and deferring and foregoing care and being constantly worried about their financial well being. And that's largely due to, you know, very high out of pocket costs and coverage that is not really serving as coverage for them.

[B]

So maybe we could start at the beginning, if you will, which is maybe helping us understand a little bit about the situation that many Americans are facing with medical debt. You just mentioned some pretty eye popping numbers that you've helped 15 million people relieve $27 billion worth of debt. But what does medical debt look like in the US right now?

[C]

Yeah, so it is a substantial problem. I think it's something like one in four Americans have medical debt of some form. How it shows up for them, you know, is it on a credit card, is it money borrowed from a friend or family, is it sitting with the hospitals, et cetera, being written off? It's all bundled together. And there unfortunately aren't really great numbers as to the specifics, but KFF has put some numbers out that it's at least $220 billion problem. We obviously know that we're going in the wrong direction on this issue as well, because coverage really is the best solution to protecting people from medical debt. And we have made some policy decisions in Washington to your point, that have really undermined, I think, the coverage situation for way too many people. And we've seen those numbers just starting to unravel right now. So Really, I think the problem is large to begin with and is only about to get worse. And it's a very, very common American problem, which is why I think that there's so much conversation around this affordability question. And I think the problem for a lot of the people that we help, and we hear this from the constituents all the time, most deadly really is they want to pay their bills, but the gap between what they're expected to pay and what they actually have in resources is just way too wide and wider. So while coverage is the best answer, good coverage that actually doesn't rely on them to pay out of pocket costs that they no way they can afford is really an important, I think, element of this. And what we're seeing is a really big surging under insurance problem. And now I think increasingly we're going to see more people with no insurance at all as well, because premiums are just way too high and out of reach for people.

[B]

So this issue of coverage being the fundamental base protection against medical debt, and yet, you know, we're at a point in time where, you know, around 90% or so of Americans have health care coverage. So I'm wondering if you could just be a little more specific about where it is that we're really falling short in terms of that coverage. So, you know, the 10% who are uninsured, but then you just use this term underinsured, and maybe you could just provide a little bit more color about what that looks like.

[D]

When we talk about underinsurance, that's pretty much saying that somebody has insurance, but it's not really protecting them. Right. So it feels useless. Right. But really, I think from a granular perspective, it means that people are spending more than 10% of their income on healthcare expenses. Right. So that tends to be the more formal definition. But increasingly, when people walk through the door of a hospital or emergency room rather, and they have a $5,000 deductible, but their earnings would in no way allow them to pay or meet that deductible. Right. They're underinsured because their insurance is actually not serving them or protecting them. And and so increasingly, as we see increased rates and take up around high deductible health plans. Right. And a move certainly in the proposed rule that came out this spring, to increase access to catastrophic coverage with very high out of pocket costs, it means that people at low incomes, low and middle incomes that don't have that kind of cash on hand will be able to use their health insurance without accruing medical care. That so we think that that is just a move in the wrong direction because hospitals then end up having to absorb those losses.

[B]

You know, and I think that even some of the latest data from the federal government regarding enrollment in the Marketplace plans for 2026 shows a double digit increase in people who are enrolled in bronze plans, which in theory are supposed to protect from catastrophic costs. But I think what we're hearing is that even those, you know, really high deductibles, the coinsurance, you know, that comes along with some of those plans, people just simply can't afford. So let's play this out. So an individual in your scenario comes to the hospital, they, let's say they have one of these high deductible health plans, they're facing a $5,000 kind of out of pocket contribution towards their care. They can't, they can't pay that bill. You know, it kind of goes through the process and now it's, it kind of qualifies as medical debt. You mentioned that you work with hospitals to help alleviate some of this medical debt. Where you can, can you tell me a little bit more about what that process looks like to work with a hospital on this?

[C]

It's relatively similar to working with an outsourced collections entity, if you will. Right. Usually it's after that you've done that already. So there's been attempts to collect a recognition that there's not gonna be an ability to collect because again, the difference between what the person actually owes and what they have is pretty vast. These are not people that have been put on payment plans, but people who are really just not able to pay and aren't paying anything towards the bill. So that goes into the bad debt file that's been written off by the hospital, written down to zero. We go ahead and we take a look back, we go back seven years and we do an analysis, sort of like presumptive eligibility, like a very similar approach. We identify based on income. Everyone that is 400% of poverty or below is. It is by far the vast majority of the people in the file. If someone's debt is particularly large and it's 5% or more of their income and they're above that threshold, we will also flag them, we will price the debt. The debt is priced similar to the market. So because these people are unable to pay in the for profit debt buying market, the chances of you collecting is very low. So the pricing is very low. Working with us is not going to be a windfall for hospitals. They do get some revenue and that's Great. But it's pennies on the dollar. So we do pay pennies on the dollar for these debts. The younger the debt, the more we'll pay. But in general, $1 of a donation to us release $100 on average of medical debt. This is my favorite, most important part is we notify all those patients that the debts have been relieved and that they then feel confident and comfortable going back to the doctor to getting that care that they need. Because we do know that that really is a big barrier to care, which really undermines sort of the purpose of the healthcare system and the hospitals in the first place. And I think that that's one of the main benefits that hospitals see in working with us, is the fact that this removes that barrier to care that they want to see removed.

[B]

There's so many things there that I want to circle back to. But before we go there, you talked about for every dollar that you spend, whose dollars are these?

[C]

Yeah. So it's a great combination. We have so many donors. There's churches that love working with us. We can focus the debt relief to their communities. It's one of the things that our proprietary debt engine, as we call it does, is it actually puts every dollar to a specific patient where they are, so that we can restrict the donation, if you will, to. To the patients living in a specific community, etc. We do get increasingly governments. This is probably nobody to. Nobody's surprised that governments are increasingly knocking on our door and. And asking us to work with us. We have about almost 30 government contracts we've completed to date or in the midst of.

[B]

And Eva, maybe this is a great time to bring you in to talk a little bit about these conversations that you are having with policymakers. What are some of the things that you are seeing, whether it's state or federal officials thinking about in terms of trying to mitigate medical debt?

[D]

Sure. So I would say that we really see it as a window of opportunity to talk more broadly around some of the more challenging issues that face patients just along their medical debt journey. And most notably, I would say that you've seen a lot of activity in states, particularly over the last two to three years. So these are things like suing people or applying liens or wage garnishment. And that often comes to top of mind for legislatures. And there is a lot of bipartisan agreement in that area of extraordinary collection actions. There are other efforts to put up guardrails around financial assistance policies, whether that's applying some thresholds around who should get financial assistance when they should get financial assistance and when they should be screened for financial assistance or moved to debt collection. And then I think we've seen not as much work in the area of health insurance coverage, which we'd like to see more of. Unfortunately, a lot of steps are being taken to erode coverage which will lead to more medical debt. So that of course is frustrating. And then I think, you know, you can't not talk about what is the, you know, most common talking point right now, which is around price transparency, which we're seeing a lot of efforts pop up in various states out of people, I think, you know, states feeling like they want to take action on the cost of healthcare and seeing that it's a silver bullet, which we don't believe that it is, but it certainly is where there's some interest in movement.

[B]

Yeah. And I think, you know, this point of financial assistance, clearly that is such an important function and benefit that hospitals, when they can provide it to their patients do. But I think that the one of the points that you're sort of alluding to is that it can't be the solution to medical debt, not least of which because there just simply isn't enough financial assistance in the country that could be made available to close some of these coverage gaps. You know, Eva, I don't know if you want to talk at all about some of the things you guys have thought about in terms of ways that we could improve coverage to try to prevent this upstream.

[D]

I mean, I would just say and reiterate, Molly, what you just said, which is financial assistance is not health coverage. And so we need to stop treating it like that because it's an important backstop. I think that, you know, momentum toward something that would really help people on the ground that are experiencing medical debt is to have access to affordable, comprehensive of health coverage. So I think for us that we're open to whatever structure that might look like, but where the people that we represent and what's important to us is that any approach or policy or cost containment activity or whatever, the spectrum of portfolio of options is that it actually is having a meaningful impact on people's out of pocket costs without sacrificing access.

[B]

Yeah. So complicated is definitely, unfortunately a word that we can use to describe many aspects of the health care system. I do want to ask you really quickly a little bit about presumptive eligibility for financial assistance, because I think that is something that you've done a lot of thinking about. So could you tell me a little bit about your work around presumptive eligibility and what you think hospitals should be thinking about in that space.

[D]

Presumptive eligibility for financial assistance, not to be confused with presumptive eligibility for Medicaid, is really just screening people much earlier in the medical billing workflow. So clarify closer toward the point of service rather than sifting through people that might be moving toward debt collection. So by screening people early, then you have the opportunity to estimate their income or use other sources to identify their income and then decide if they are eligible for your financial assistance program and swiftly move them into financial assistance, reducing administrative burden for yourself downstream.

[B]

Right.

[D]

And also offering a contactless and paperless option for patients. So we also know from the deep work we've done around financial assistance that many people never even fill out the financial assistance application. They feel overwhelmed for it by it, or they're under duress because they're in the middle of a health episode. So this tool really being introduced early on in the workflow allows for patients to swiftly move into those capacity categories and before the first bill is dropped, and then they can be notified that they have access to free care or

[B]

discounted care regarding presumptive eligibility. Also, I think for our hospital listeners out there who might be interested in exploring these programs do want to note that both the AHA and I'm Aware Undue Medical have resources available, including things like case studies where you could learn more about what it takes to implement a presumptive eligibility program. Eva Allison, thank you so much for your time today. I really appreciate all the information you've just provided. Really important, really important work. Just been very eye opening also to really get to work with your team and learn from you in these various discussions about what the solutions are here. So thank you.

[A]

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