Witnesses urge Vermont to adopt medical-debt relief model after Rhode Island results

Vermont lawmakers heard testimony on S.27 on medical-debt relief, with witnesses urging the committee to adopt a model similar to Rhode Island’s program and outlining implementation, outreach and credit-report implications.

The Treasurer for the state of Rhode Island told the committee that the Rhode Island legislature allocated $1 million to launch a medical-debt buy-down program that contracted with the nonprofit Undo Medical Debt. “We’ve been able to buy, over $7,000,000 of medical debt for just under a hundred thousand dollars,” the Treasurer said, and added the state has impacted “over 2,000 folks” who will receive notification that their debt has been released.

The bill’s proponents told legislators S.27 would use income or debt-to-income thresholds to identify beneficiaries automatically rather than rely on an application process. The Treasurer described Rhode Island’s eligibility rules as automatic for people meeting income and debt-share criteria (the state used a threshold tied to the federal poverty level and a metric of medical debt as a share of annual income) and said the state paid primarily for older debts, which are cheaper to purchase from collectors.

Why it matters: witnesses said medical debt harms access to care and economic opportunity. Heather Baumann, a phlebotomist at the University of Vermont Medical Center and vice president of AFT Vermont for healthcare, called the relief measure “a piece of the puzzle” toward broader affordability and access goals and said it could help people avoid postponing preventative care. “This is a great step on that path,” Baumann said.

Details and evidence

Undo Medical Debt and outreach: Rhode Island contracted with Undo Medical Debt and used a mailed-notification strategy that included the state seal on the envelope; the Treasurer told the committee that adding the state seal and signature was intended to reduce recipients’ suspicion that notices were junk mail. The Treasurer said the vendor complies with HIPAA and other consumer-protection practices under contract.

Credit reporting and federal rulemaking: Rhode Island also passed a law removing medical debt from credit reports effective July 1 in that state, the Treasurer said; several witnesses noted a separate federal Consumer Financial Protection Bureau (CFPB) rule to limit medical debt reporting has been delayed. Liz Sharp, director of community economic development and food security at Capstone Community Action and an accredited financial counselor, told the committee medical bills in collections are a leading cause of collection entries on credit reports and described how removing them can raise scores quickly. “Medical debt is the largest source of debt reported to collection agencies,” Sharp said, citing Commonwealth Fund research she referenced in testimony.

Population impacts: Charley Glisserman, policy director at the Vermont Network Against Domestic and Sexual Violence, said medical debt is a particular barrier for survivors of intimate-partner violence because it can increase housing and employment instability. “Medical debt can force survivors to skip trips to the doctor or put them out of work or create another barrier to leaving an abusive partner,” Glisserman said.

Operational and fiscal notes: Rhode Island’s Treasurer acknowledged potential trade-offs: buying older debt is relatively inexpensive now, but newer debt may cost more over time. The Treasurer said the state has asked the legislature for another $1 million allocation to sustain the program and is exploring additional policy steps such as limits on interest or caps on how much medical debt may be assessed as a percentage of income.

Questions from the committee focused on implementation details: how consumers are notified, whether notices would be mistaken for junk mail, vendor data privacy safeguards, and how quickly relief can reach consumers. The Treasurer said Rhode Island began public outreach immediately with news, television, radio and social media, and that program activity from the vendor began within months of contracting; the Treasurer summarized the timeline as a press conference and contract in October and visible results by January–February.

No formal committee action was taken during the hearing. The committee chair scheduled further consideration of S.27 for after the floor session, with the possibility of a vote later in the day.

Ending

Supporters told the committee S.27 could relieve immediate burdens for Vermonters and help them access care while acknowledging the policy is one element of a broader strategy to control health-care costs. Lawmakers asked for additional implementation details, outreach plans and cost estimates before advancing the bill.