21-04-2025
Medical Debt to Be Forgiven for Thousands Under New Proposal: What to Know
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A Vermont bill that would eliminate tens of millions of dollars in medical debt for people in Vermont is a step closer to becoming law.
Why It Matters
According to the Vermont State Treasurer, more than 1 in 10 people in the Green Mountain State hold medical debt. Nationwide, approximately 14 million people owe more than $1,000 in medical debt, and about 3 million people owe medical debt of over $10,000, according to KFF Health.
What To Know
The Vermont House of Representatives approved a measure on Friday that "allocates $1 million to contract with a nonprofit to purchase and forgive certain medical debts and prohibit reporting medical debt to credit agencies." The bill has already passed the state Senate.
The bill also enhances consumer protections by aiming to ensure fair practices in medical debt collection and by increasing oversight of how medical debt is reported and utilized.
Vermont Treasurer Mike Pieciak said the proposal will eliminate some $100 million of medical debt for more than 60,000 moderate- and low-income people in Vermont. Such debts will also be prohibited from showing on Vermonters' credit reports, he said.
The proposal was first made in January, with Peiciak spearheading the effort alongside two Democrats: Senator Ginny Lyons and Representative Alyssa Black.
Stock image of a stethoscope laid over U.S. currency.
Stock image of a stethoscope laid over U.S. currency.
GETTY
What People Are Saying
Vermont Speaker of the House Jill Krowinski: "Vermonters should not face financial peril because they sought needed medical treatment and ended up falling into medical debt. With the passage of S.27, we are taking a powerful step to relieve that burden, protecting families from unfair credit penalties and showing that compassion and fiscal responsibility can go hand in hand. This bill is about dignity, economic fairness, and giving Vermonters the opportunity for a fresh start."
Vermont Treasurer Mike Pieciak said in a press release: "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. Our proposal will eliminate medical debt and provide life-changing relief to tens of thousands of Vermonters."
Representative Alyssa Black, chair of the Vermont House Health Care Committee, said in January: "Medical debt doesn't reflect someone's financial responsibility. It's a reflection of the gaps in our health care system. By removing it from credit reports, we're giving people a chance to rebuild their lives without medical debt holding them back."
What Happens Next
A third reading of the bill will take place on Tuesday, before it heads to the Senate for consideration of minor amendments.
Pieciak said he believes that the "Senate will concur with those amendments pretty quickly, and then the bill will go to the governor for his consideration."
