By Aaron Allen, The Seattle Medium
Seattle City Councilmember Dionne Foster has proposed spending $350,000 to eliminate an estimated $5 million to $6 million in medical debt for Seattle residents through a partnership with a national nonprofit that purchases outstanding medical bills at a discount and cancels them.
Introduced during the city’s 2027-28 budget deliberations, the proposal would direct one-time funding through the Human Services Department to Undue Medical Debt, an organization that works with governments, hospitals and collection agencies to relieve medical debt for qualifying residents. If approved, the investment could help families struggling with medical bills amid rising housing, food and other living expenses.
“No one in our community should lose sleep, savings, or financial security over a hospital bill,” said Foster. “Medical debt can follow families for years, long after the medical emergency is over. That’s why I’m excited to partner with Undue Medical Debt to turn a modest City investment into millions in debt relief, wiping out existing medical debt for pennies on the dollar.”
Under the proposed program, residents would not need to apply for assistance. Undue Medical Debt would identify qualifying accounts available for purchase, buy the debt from health care providers or collection agencies for a fraction of its original value, and permanently cancel the balances. Affected residents would receive a notification by mail informing them that their debt had been eliminated.
Eligibility is generally based on financial need, including household incomes at or below 400% of the federal poverty level or medical debt exceeding 5% of annual income. However, meeting those criteria would not guarantee relief because the nonprofit must be able to purchase the qualifying debt.
According to the nonprofit’s program information, recipients generally do not owe federal income taxes on medical debt canceled through its relief program, eliminating another potential financial concern for families.
Courtney Werpy Story, vice president of government initiatives at Undue Medical Debt, described how medical bills can continue affecting families long after they receive treatment.
“Medical debt doesn’t just sit on a balance sheet, it follows people home, keeps them up at night, and forces impossible choices between paying a medical bill and a necessity like rent,” said Story. “When neighbors aren’t weighed down by bills they never chose to take on, the whole community is healthier and stronger.”
Undue Medical Debt has partnered with 33 government entities nationwide to eliminate more than $13 billion in medical debt for nearly 7 million patients, according to figures provided for the proposal.
Other cities have used relatively small public investments to cancel significantly larger amounts of debt. Memphis, Tennessee, invested $159,000 to eliminate $17 million in medical debt, while San Antonio, Texas, used $115,000 to erase $57 million.
Foster’s proposal has also drawn support from other Seattle City Council members, including Budget Chair Dan Strauss, who represents District 6.
“Medical debt is a policy failure of the American healthcare system. It should not exist, full stop,” said Strauss. “This is a proven strategy that can leverage a relatively small investment from our city to deliver an order of magnitude more debt relief for working families.”
Council President Joy Hollingsworth, who represents District 3, said medical debt is a significant concern for residents in her district.
“This proposal recognizes medical debt relief as a necessary tool to help families stay financially stable. District 3 will see significant relief because we have a high concentration of folks carrying medical debt. The emotional toll of an illness is already overwhelming; no one should have to navigate this burden alone,” said Hollingsworth.
Beyond the immediate financial burden, medical debt raises broader concerns about economic inequality and the disproportionate impact of health care costs on lower-income families, people with disabilities and communities of color.
“Because our health safety net is riddled with holes, people with low incomes, people with disabilities, and people of color have long been most deeply impacted by medical debt. This problem has only deepened as the affordability crisis has increased strain on household budgets,” said Marcy Bowers, executive director of the Statewide Poverty Action Network.
Advocates supporting the proposal point to estimates that one in three Washington residents experiences significant financial stress related to health care costs. The Economic Opportunity Institute is among the organizations backing Foster’s proposed investment.
Those financial pressures could intensify as Washington prepares for federal changes affecting Medicaid eligibility and coverage under H.R. 1, with new requirements scheduled to take effect beginning in 2027.
According to estimates cited by advocates, approximately 215,000 Medicaid enrollees in King County could face coverage disruptions, potentially increasing the number of families struggling to afford medical care.
“Unless we act, our uninsurance rate will nearly double by 2028,” said Emily Brice, co-executive director of advocacy at Northwest Health Law Advocates. “Councilmember Foster’s plan will offer immediate relief from crushing medical debt while we build the broader systemic reforms that can prevent patients from falling into debt in the first place.”
While the proposal could eliminate millions in existing medical debt, it would not directly reduce health care costs, prevent future medical bills or address potential losses of insurance coverage. Advocates view debt cancellation as one way to provide immediate assistance while broader reforms remain unresolved.
The proposed funding remains under consideration as part of the Seattle City Council’s 2027-28 budget process. Council members must decide whether to include the $350,000 allocation in the final budget before the partnership and debt relief effort can move forward.
Residents interested in following the budget discussions or providing public comment can find meeting information at seattle.gov/council.
For Foster, the proposal is informed partly by her experiences navigating early motherhood and limited financial resources. She said an unexpected medical emergency can create lasting financial hardship even for people who work hard, manage their responsibilities and maintain health insurance.
“You can work really hard, do everything the right way, have health insurance, and still have one medical emergency land you in financial hardship,” said Foster. “The relief we’re investing in through this partnership is going to help make sure that medical emergencies don’t follow people around for the rest of their lives.”
