Montpelier, VT – Today, State Treasurer Mike Pieciak joined legislative leaders at a press conference to thank the Senate for their unanimous approval of Senate Bill 27, a proposal to eliminate $100 million in medical debt using a one-time investment of $1 million—all without raising taxes or fees. The bill also prevents health care providers from reporting medical debt to credit-reporting agencies, protecting Vermonters’ credit scores in the future.
“Vermont has some of the highest health care costs in the country, putting many Vermonters at risk of bankruptcy from a medical emergency through no fault of their own,” said Treasurer Pieciak. “Our proposal will eliminate medical debt and provide life-changing relief to tens of thousands of Vermonters.”
Pieciak continued, “I want to thank the Senate for their unanimous support of the medical debt relief proposal, especially Senator Ginny Lyons for her leadership in bringing us one step closer to making this commonsense investment in Vermonters.”
Senator Lyons, the bill’s lead sponsor, said, “Health care costs directly affect our local economy. A new study shows that increases in health care costs result in job loss, particularly for men, and lead to substantial increases in mortality. Removing the specter of burdensome medical debt can lessen these health care woes.”
Unlike other types of debt, medical debt is difficult to avoid because patients rarely know the cost of care upfront, and they often have no choice to incur it. Medical debt can drag down credit scores, increasing costs to secure a mortgage, start a business, and achieve upward economic mobility.
Individuals with unpaid medical debt are also more likely to put off seeking care, which can worsen their health, lead to more expensive care in the future, or put them out of work. The Vermont Department of Health’s 2021 Vermont Household Health Insurance Survey found that the fear of medical debt impacted 85,000 Vermonters’ health care decisions.
Under the Treasurer’s proposal, the State would partner with a nonprofit to purchase medical debt from providers at pennies on the dollar of its original cost. Once acquired, the debt would be completely forgiven and any negative impacts to the debtor’s credit report would be removed.
Vermonters would be eligible for debt relief if they (1) have debts in “terminal bad debt status” and (2) are in a household at or below 400% of the Federal Poverty Level (currently, $60,240 for a single person and $124,800 for a family of four) or owe medical debt equal to or exceeding 5 percent of annual household income. Vermonters would be automatically enrolled in the program—no forms, no hassle.
The proposed funding mechanism uses a portion of funds previously appropriated to the Treasurer’s Office to buy down outstanding state bonds. As a result, the proposal does not increase fees or taxes.
Other states like Rhode Island have adopted similar initiatives, successfully wiping out medical debt for their most vulnerable residents.
You can learn more about the medical debt relief proposal here.
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