Committee reviews S.27 to buy and abolish medical debt and bar reporting to credit bureaus

At a House Health Care Committee hearing, lawmakers reviewed S.27, a bill that would appropriate $1,000,000 to the state treasurer to contract with a nonprofit to acquire and abolish certain medical debts for eligible Vermont residents and prohibit credit reporting of medical debt.

The bill would require the treasurer to contract with a nonprofit that will purchase medical debt from health care providers at fair market value, cancel the debt at no cost or tax consequence to the debtor and coordinate removal of adverse information from consumer credit reports. Eligible debtors must be Vermont residents with household income at or below 400 percent of the federal poverty level or who owe medical debt equal to 5 percent or more of household income and whose patient accounts still show an outstanding balance after routine collection efforts.

Jen Carby, staff from the Office of Legislative Council, summarized the bill’s structure, noting that Sections 1 and 2 together provide the $1 million appropriation and identify a funding offset: a reduction in a previously appropriated bond-redemption appropriation (discussed in the bill text as a reduction from $20,000,000 to $19,000,000, though witnesses said that number has been moved in other bills). “Section 1 appropriates $1,000,000 to the state treasurer from the general fund in fiscal year 2026 for the purpose of contracting with a nonprofit entity to acquire and repay certain medical debts incurred…