House Appropriations Committee advances bill to buy and abolish medical debt and bar credit reporting

The House Appropriations Committee on April 10 heard testimony on S.27, an act that would appropriate $1,000,000 from the general fund in fiscal year 2026 to the state treasurer to contract with a nonprofit to acquire and abolish certain medical debts incurred by Vermont residents and would ban credit-reporting of medical debt going forward.

The bill, introduced to the committee as a health-care measure and described by Legislative Counsel staff, would require the treasurer's contractor to purchase eligible medical debt at fair market value, abolish it with no tax or cost consequences for the debtor, and work with providers or collection agencies to remove any adverse information from consumer credit reports. "This is S.27 as recommended by the Committee on Health Care," said Jen Carby of the Office of Legislative Counsel, summarizing the measure and the $1,000,000 appropriation to the treasurer's office for contracting.

Supporters told the committee the measure aims to remove the persistent economic and health effects of medical debt. Representative Paige, the bill sponsor, said, "Medical debt can happen to any of us," and described both catastrophic bills and routine treatment costs such as fertility care that can produce burdensome balances. Becky Wasserman, Director of Financial Empowerment in the Treasurer's Office, said the $1 million investment could be used to abolish a much larger face value of debt: "The million dollars is expected to cover up to $100,000,000 worth of medical debt." She also described how the treasurer's office would hold funds, approve invoices from the contractor and oversee the administrative process.

Key provisions explained to the committee

- Eligibility: The bill would limit debt abolition to debtors who are Vermont residents and who either have household income at or below 400% of the federal poverty level for the household size or whose medical debt is 5% or more of household income. The transcript states those thresholds are part of the eligibility criteria but that some specific definitions (for…