D.C. plans to erase millions of dollars in medical debt for thousands of eligible residents, helping ease a burden that can have far reaching impacts across all aspects of life, especially for the city’s non-white residents.

As a part of her proposed 2024 budget released last week, Mayor Muriel Bowser announced a plan to purchase up to $90 million in medical debt, meaning the 90,000 D.C. residents with outstanding payments could see their debts erased this year. D.C. joins a growing movement of local governments across the country making similar moves; last year, Pittsburgh City Council passed a budget that set aside $1 million for debt relief, New Orleans is finalizing a contract to relieve debt in the coming year, and in Cook County, Illinois, residents were set to see their debts paid off at the beginning of 2023.

To be eligible, a resident must be earning less than or equal to four times the federal poverty level, or have medical debt that is at least 5% of their household income.

Non-white D.C. residents are three times more likely to hold medical debt than their white counterparts, according to a press release from Bowser’s office. Like other forms of debt, medical debt can ruin a credit score, making it difficult to buy or even rent a home, get a job, or enroll in higher education. But it can also have direct health impacts — it dissuades someone from seeking additional care, or forces someone to cut back spending on other essentials, such as food, to pay down their debt.

“We know that health disparities have existed long before the COVID-19 pandemic, but the pandemic exacerbated the inequities that have existed for too long,” Wayne Turnage, deputy mayor for health and human services and director of the city’s department of health care finance, said in a statement. “We also know that people paused their preventative medical procedures during the pandemic, but that prevention is the foundation to a healthy person and healthy city. We want all residents to have a fair shot at controlling their health and believe that cancelling their medical debt will help achieve that goal.”

D.C. will be using $900,000 in surplus money from last year’s budget that was specifically set aside to address health inequities and racial disparities. The city will spend one penny on the dollar or $1 for every $100 of debt, according to a spokesperson with DCHF.

D.C. is seeking a third-party debt purchaser to buy the debt, and will accept proposals from those organizations through a Notice of Funding Announcement released Friday, March 31. They hope to finalize a purchaser by April or early May, who would then purchase the debt directly from the city’s hospitals. It’s unclear when exactly residents might see their outstanding debts erased. Once the hospitals reach an agreement with the selected grantee, the debt should be erased automatically.

Nonprofit RIP Medical Debt is a group that purchases medical debt at a discount from hospitals and health systems, and will likely apply for the grant, the Washington Post reported. This is the same group that’s working out contracts with other cities like Pittsburgh, New Orleans, and Toledo, Ohio.

While medical debt is praised as relief for the roughly 23 million Americans living with some level of medical debt, health policy advocates note that it doesn’t solve the the root factors that result in debt in the first place, like the high cost of care and out-of-pocket payments, or a lack of access to health insurance.