California lawmakers are advancing a new proposal aimed at easing the financial burden of medical debt, as officials warn that millions of residents continue to struggle with health care costs.

      Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters) last week introduced Assembly Bill 2123, known as the Medical Debt Relief Act of 2026. The measure would create a state-backed program to buy and eliminate qualifying medical debt for low- and middle-income Californians.

      The proposal comes as nearly 40% of Californians are saddled with medical debt, according to the California Health Care Foundation. The debt is often driven by high out-of-pocket costs, deductibles and unexpected bills. Lawmakers and advocates say the issue can lead to long-term financial instability, including damaged credit and housing challenges.

      “Too many Californians are doing everything right and still getting buried in medical debt they realistically can’t pay,” said Aguiar-Curry during a news briefing at the State Capitol on April 20. 

      “AB 2123 takes a common-sense approach—buying up that debt for pennies on the dollar and wiping it out,” she said. 

      The bill would establish a Medical Debt Relief Program within the state, allowing California to purchase debt from providers or collection agencies at reduced cost and cancel it. The program would be funded with a $2.5 million investment and target households earning up to 400% of the federal poverty level or those with high debt relative to income.

      State Treasurer Fiona Ma, who is sponsoring the bill, said the initiative could deliver large-scale relief. “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 health care costs,” Ma said.

      Health advocates say even insured patients face steep expenses. Spencer Dayton, a cancer patient, described the toll of ongoing treatment costs.

      “These are not optional expenses; they are the cost of me staying alive,” said Dayton. “Being sick is hard enough. Going broke to stay alive should never be part of our treatment plans.”

      Supporters say the proposal builds on earlier efforts, including a Los Angeles County program that erased hundreds of millions in medical debt and a 2024 state law that removed medical debt from credit reports.

      “People shouldn’t have to choose between seeing a doctor and keeping the lights on,” Aguiar-Curry said.

      If approved, AB 2123 would mark a major step in California’s efforts to address medical debt and reduce financial strain for vulnerable residents.