Vermont state treasurer pitches proposal to tackle medical debt
Published: 01-23-2025 8:34 PM |
WHITE RIVER JUNCTION — The issue of medical debt is personal to Hartford native state Sen. Becca White, D-Windsor.
While attending the University of Vermont, White had to go to the emergency room at the University of Vermont Medical Center for an allergic reaction and unexpectedly found herself with a medical bill totaling several thousand dollars.
“I was extremely anxious and fearful I couldn’t pay,” she said.
In an attempt to pay the bill, she almost got a credit card, a move many people make that often creates an even larger debt issue. Thankfully, through word of mouth she heard about University of Vermont Medical Center’s financial assistance program and was able to clear up her debt.
White is now co-sponsoring a bill that takes up state Treasurer Mike Pieciak’s proposal to spend $1 million to eliminate $100 million in medical debt for qualified Vermonters and shield Vermonters’ credit scores by eliminating the reporting of medical debt to credit agencies.
“We saw an opportunity to take a really practical and important step forward,” Pieciak said in a Tuesday phone interview.
Pieciak is proposing that the state partner with Undue Medical Debt, a national nonprofit based in New York that uses donations to buy medical debt from care providers at no cost to the debtor. Undue Medical Debt has eliminated more than $14.8 billion in medical debt to date and has partnered with other states, including Rhode Island and Connecticut, to implement similar programs.
“When debt is unpaid it becomes less likely it’ll ever be collected, so you can buy it at such a low price,” Pieciak said. Because the creditors have such a small chance of getting paid any amount for the debt, the value of the debt plummets.
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“It’s the prime time to take this action because we can have this 100 to 1 cost, but the consumer is experiencing the full impact of it,” Pieciak said.
The $1 million Pieciak is recommending to use for the program is a portion of funds appropriated to his office about four years ago to buy down outstanding state bonds. Since the state is making money from the funds’ interest, it hasn’t spent all of the money on buying down bonds yet. Because his office already holds the money, there is “no need for increased spending, taxes, or fees to implement the proposal,” according to a Tuesday news release from Pieciak’s office announcing the proposal.
Vermonters would be eligible for the proposed debt relief program if they have debts with “terminally bad status,” meaning the provider has tried and failed to collect on the debt, and live in a household at or below 400% of the Federal Poverty Level which is $60,240 for a single person and $124,800 for a family of four, or owe medical debt equal to or exceeding 5% of household income. Eligible residents will be automatically enrolled in the program.
Undue Medical Debt would negotiate with providers and inform eligible debtors if their debt has been forgiven.
An estimated 62,000 Vermonters are burdened with medical debt, the news release said.
“It’s very easy to accrue medical debt very quickly, especially if someone’s chronically ill,” said Elizabeth Austin, the executive director of the Good Neighbor Health Clinic and Red Logan Dental Clinic, a nonprofit in White River Junction that provides free medical and dental care to uninsured and underinsured Upper Valley adults. “A lot of people who come to us are carrying balances.”
Of the 800 patients the two clinics saw in 2024, 85% of dental patients and 76% of medical patients had delayed getting care prior to visiting the clinics.
“When you’re making a decision to either put food on the table or heat your home it can be really hard to say, ‘I also need a blood test,’ ” Austin said.
A Senate bill with the debt relief proposal is expected to be introduced next week, White said.
State Sen. Larry Hart, R-Topsham, has signed onto the bill along with other Republicans. Hart said he has no concerns about the bill at this time and expects there to be continued bipartisan support.
While the proposal could put a dent in Vermonters’ existing debt, it won’t prevent future medical debt.
“Medical debt is a structural outcome,” Mike Fisher, chief health care advocate at Vermont Legal Aid, said in a livestream of Tuesday’s press conference announcing the proposal. “It’s something that we know will happen based on the way our health care system is structured.”
Because hospitals know they will not be able to collect all of the payments they are owed, they bill higher overall to compensate, Fisher said in an interview.
“It cannot be this way forever,” said Austin. “It’s unsustainable.”
Emma Roth-Wells can be reached at erothwells@vnews.com or 603-727-3242.