About 23,000 people across Connecticut are about to get a big Christmas present in the mail.

Next Monday, letters will go out notifying them that all, or part, of their medical debt is wiped clean. It’s all thanks to a partnership between the state of Connecticut and a nonprofit group that buys hospital debt for pennies on the dollar.

If you get a letter from Undue Medical Debt, don’t throw it out.

“If they are included in this first round of debt relief, they will receive a letter in the mail from Undue Medical Debt,” Lt. Gov. Susan Bysiewicz said at a Monday morning news conference. “Those letters are going out on Dec. 23.”

It’s the first phase of an ambitious plan to reduce crushing medical debt.

“This can be life-changing,” Bysiewicz said. “Once you receive this letter, your debt is eliminated. You don't have to do anything, except keep the letter.”

Connecticut is using $6.5 million in federal pandemic relief money to pay off approximately $1 billion in medical debt. This month’s round is expected to deliver $30 million in relief – at a cost of just $100,000.

How is that possible?

Those bills are already in collections – and hospitals are eager to get them off the books – even at a big loss.

“We buy those debts for pennies on the dollar,” said Undue Medical Debt President Allison Sesso. “Just like a for-profit debt buyer would do. But we leverage government and donated dollars to do that.”

The state will launch additional rounds of relief next year, officials said.

Not everyone qualifies for relief.

Individuals must make less than $60,240 per year or $124,800 for a family of four (four times the federal poverty level). If you earn more than that, you’re still eligible if your medical debt is more than 5% of your income.

But not all eligible patients will see their past-due bills cleared. Undue Medical Debt must negotiate a purchase price with a hospital, clinic, collection agency or outside medical debt buyer.

Three other states have launched similar programs to wipe out medical debt, including New Jersey and Pennsylvania, as well as New York City, Chicago, Los Angeles and a dozen other cities.

Gov. Ned Lamont believes the investment pays big dividends for the economy.

“Get that off of your credit history,” he said. “Make it a little easier for you to rent that home or, you know, be able to buy a car.”

A new state law bans medical debt from going on someone’s credit report.

Officials acknowledged that medical debt relief is only a “Band Aid” on a bigger problem: sky-high hospital rates. Inpatient prices in Bridgeport and New Haven are 40% more than the national median, according to a recent report from the Connecticut Office of Health Strategy.

“People are very frustrated because they’re not able to get the care,” said Dr. Saud Anwar, a Democratic state senator from South Windsor. “They’re not able to get the tests. They’re not able to get the medication.”

The Connecticut Hospital Association, which backs the medical debt relief plan, blamed the state for “a significant underpayment” for Medicaid patients.

“Medicaid is 62 cents on the dollar of cost – not charged – of what it costs the hospital to provide the care. Medicare is 74 [cents],” said CHA CEO Jennifer Jackson. “We have been in conversations with the administration and with the Legislature about how we can address that.”

Lamont said he is open to higher Medicaid rates, but balked at relaxing the state’s strict spending limits – known as “fiscal guardrails” – to pay for them.

“I’m not somebody who believes the answer to everything is more subsidies from the taxpayers,” Lamont said. “If we find there are some areas, especially when it comes to preventive care and some of the specialists that are way underpaid and they’re denying people access, that’s something we’re going to take a good hard look at.”

Lamont delivers his State of the State address on Jan. 8. He will propose a new two-year budget about a month later.