Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters). Courtesy photo

SACRAMENTO, CA (MPG) - Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters) held a press conference to highlight Assembly Bill 2123 (AB 2123), the Medical Debt Relief Act of 2026. Sponsored by California State Treasurer Fiona Ma, the bill would create a state fund to provide medical debt relief for eligible low- and middle-income Californians, aiming to reduce healthcare-related financial strain.

“Too many Californians are doing everything right and still getting buried in medical debt they realistically can’t pay,” said Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters). “AB 2123 takes a common-sense approach, buying up that debt for pennies on the dollar and wiping it out.”

AB 2123 would establish a Medical Debt Relief Program within the California Health Facilities Financing Authority, in partnership with the Department of Health Care Access and Information. It would authorize the state to contract with a debt relief coordinator to acquire and cancel qualifying medical debt. The program would be funded with a $2.5 million General Fund investment and leverage the secondary debt market held by providers or collectors and purchase it at a reduced cost to eliminate it. Eligibility would include households earning up to 400% of the federal poverty level or those with medical debt exceeding 5% of their income.

“This initiative is about making a full recovery, restoring your health and retaining financial stability,” said Treasurer Ma. “Through this initiative, California can leverage its financial tools to relieve billions in burdensome debt for residents who did everything right but still fell behind due to healthcare costs.”

Nearly 40% of Californians carry medical debt, often driven by high out-of-pocket costs, deductibles and unexpected bills, even among the insured. Once in collections, this debt can damage credit for years and contribute to housing and financial instability. Healthcare advocates emphasized the real-life consequences and the need for a coordinated, statewide solution. Dr. Spencer Dayton, a Stage IV cancer patient and C4 Unfiltered Advisory Board Chair with the California Colorectal Cancer Coalition, highlighted the true cost of staying alive.

“When people hear that someone has insurance, they often assume that they are protected. That’s just simply not true and it does not mean that care is affordable. For patients like me, the cost of survival is staggering. My treatments come with a $2,000 co-pay. I have an outstanding $500,000 medical debt for a necessary biopsy. And my monthly medications cost several hundred dollars before anything else,” said Dayton. “These are not optional expenses; they are the cost of me staying alive. Being sick is hard enough. Going broke to stay alive should never be part of our treatment plans.”

This bill builds on successful local and state efforts to address large-scale debt relief. In 2024, Los Angeles County launched a pilot program that erased $363 million in medical debt with a $5 million investment by purchasing medical debt on the secondary market for pennies on the dollar, making the program highly cost-effective. In the same year, SB 1061 (Limón) was signed into law, which prevents medical debt from appearing on credit reports. AB 2123 is the next phase of direct, large-scale debt relief for Californians.

“People shouldn’t have to choose between seeing a doctor and keeping the lights on,” said Aguiar-Curry. “AB 2123 is about giving families a fresh start by wiping out medical debt that’s been weighing them down for far too long.”   

Assemblymember Cecilia Aguiar-Curry represents California’s 4th Assembly District, which includes all of Lake, Colusa, Napa and Yolo Counties, and part of Sonoma County. She serves as the Assembly Majority Leader and Chair of the California Legislative Women’s Caucus.