Vermonters owe more than $150 million in unpaid medical debt, and elected officials unveiled a proposal Tuesday to wipe out most of it.
Old medical bills that have reached “terminal bad debt status” can be purchased for pennies on the dollar from collectors and health care providers. Legislation set to be introduced in the House and Senate would use $1 million in state funding to buy, and then retire, up to $100 million in debt.
State Treasurer Mike Pieciak says an estimated 60,000 Vermonters have outstanding medical bills. And he said the program would be targeted at low- and moderate-income residents who are least able to afford unexpected medical expenses.
“It can be a drag on a family’s finances. It creates significant barriers to upward mobility. Unpaid medical debt can negatively impact one’s credit score,” Pieciak said at a press conference in the Statehouse Tuesday morning.
Essex Rep. Alyssa Black, the Democratic chair of the House Committee on Health Care, said the bill would also prevent medical debt from negatively impacting Vermonters’ consumer credit reports.
“Medical debt doesn’t reflect someone’s financial responsibility. It’s a reflection of the gaps in our health care system,” Black said. “And by removing it from credit reports, we’re giving people a chance to rebuild their lives without medical debt holding them back.”
The federal Consumer Financial Protection Bureau finalized a nationwide rule Tuesday that also removes medical bills from credit reports. Pieciak’s office said Vermont should continue to pursue duplicative language in state law in case that federal policy is rescinded by the Trump administration.
Medical debt doesn’t reflect someone’s financial responsibility. It’s a reflection of the gaps in our health care system.Essex Rep. Alyssa Black
The debt-forgiveness plan is modeled after similar initiatives in states including Arizona, New Jersey, Connecticut and Rhode Island, which has retired $7 million in medical debt since launching its program in October.
While uninsured Vermonters tend to face higher out-of-pocket costs for health care services, Mike Fisher, Vermont’s chief health care advocate, said high copays and deductibles have made medical debt a serious financial issue even for Vermonters who are insured.
“We hear from Vermonters who say, when they get advice that they need more care or they have a condition that they’re worried about, that they’re afraid of going to get care because they’re afraid of incurring more debt,” Fisher said.
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