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MONTPELIER — A bill that passed unanimously through both state chambers this spring will erase up to $100 million in medical debt and is now beginning to be implemented.
S.27 will primarily aid low- and moderate-income Vermonters, targeting debt over 18 months-old and be managed by the non-profit partner Undue Medical Debt. Due to high healthcare costs and in light of the feds’ recent slashes to Medicaid, this state legislation comes aptly-timed.
It could help around 76,500 Vermonters with a one-time $1 million investment to relieve existing debt — and, it will prevent all medical debt in the future from affecting Vermonters’ credit scores, thereby improving access to healthcare across socioeconomic strata.
Once debt begins to be targeted and paid off by the state, the treasurer’s office will begin notifying Vermonters whose medical debt has been forgiven to inform them of the celebratory news, the big goal being to minimize shame and encourage folks to still seek necessary care.
“If you think about healthcare costs and cost of health insurance, I think it’s one of the biggest drivers making Vermont unaffordable. It’s one of the biggest challenges we’re facing in the state,” said Treasurer Mike Pieciak, who led the charge on this bill.
Vermont has a disproportionately high rate of medical debt relative to other states, despite its low rate of uninsured. Many Vermonters are underinsured, meaning they have a high deductible or a high co-pay, with lots of things uncovered, leading to big bills.
“Eliminating up to $100 million in medical debt with a really relatively minor price tag of $1 million also was attractive to me,” Pieciak said. “That big impact without a big price tag, and also just thinking about ways to improve affordability and improve access to healthcare, is critical.”
Pieciak said his team was very intentional about building bipartisan support throughout this past legislative session. They talked about medical debt as a non-partisan issue, so the support came early out of committee votes and bill sponsorships, ultimately resulting in unanimous passage.
“But it’s always nice and somewhat surprising when you get a broadly unanimous vote out of the legislature on something like this,” he said. “That was our intent. We wanted to drive consensus toward having a bipartisan bill, but having it be unanimous still was a pleasant surprise.”
The state’s plan from here is to contact a nonprofit to manage the program, most likely Undue Medical Debt, which has worked with other states to buy debt unlikely to ever be paid back, so the full amounts can be forgiven at a fraction of the price-tag cost.
The contracted organization will then negotiate with providers, hospitals and physicians groups to purchase the medical debt and reach an agreement to determine eligibility and make an offer to pay loan-providers for debt forgiveness on behalf of Vermonters impacted.
They’ll also jointly notify both each Vermonter whose debt is being eliminated as well as any credit rating bureau necessary to inform all parties involved about outstanding debts eliminated.
“So often when people have medical debt, they feel shame, and that shame makes them not go get more healthcare because they’re worried their doctor won’t see them because they owe them money,” Pieciak said. “They’re worried about accumulating even more medical debt.”
“And when you avoid getting care and treatment, something that might be a relatively simple medical issue or medical procedure can get a lot more complicated,” he added. “It can be a much worse health outcome and a much worse financial outcome. It can cost a lot more.”
This is why it’s important to contact Vermonters directly to tell them they’ve been unburdened from medical debt, providing a hugely empowering clean slate to tens of thousands of people and allowing them to redirect money to food, child rearing or becoming homeowners.
The state is already working with Undue Medical Debt to negotiate a contract for the third party provider to conduct this work on the ground, and it’s likely some of the debt in question will already have been forgiven by the end of this year.
“It is a really big deal to be able to provide this kind of relief at this moment in time when the federal government is cutting healthcare and Medicaid assistance, when our costs in Vermont are going up,” Pieciak said.
“There is still the underlying system that’s expensive that has not been addressed by this bill,” he added. “We need to really continue to focus on this, because in Vermont we’ve seen our premiums on the exchange go up by 100% over the last five or six years when the national average has basically stayed flat — that impacts individuals, small businesses, nonprofits.”
Although the retroactive debt relief component of the bill itself is intended as a one-time infusion of finite funding without renewal, Pieciak said they may have to reevaluate the ongoing need for relief, particularly with respect to potentially ongoing changes in federal healthcare policies.
The estimated total of all medical debt eligible for elimination through this program is about the amount being targeted, $100 million. Eligible debt is medical debt that’s 18 months-old or older and is held by moderate- and low-income Vermonters, at or below 400% of the poverty level.
This will help about 765,000 people.
Pieciak believes some other patient assistance programs passed through the legislature will help prevent future debt. The prospective piece about eliminating medical debt from credit reports will remain active, is free for the state and its taxpayers, and will benefit everybody.
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