House advances S.27 to buy and abolish qualifying medical debt, bars reporting to credit agencies

MONTPELIER — The Vermont House on the floor advanced Senate Bill 27, a bill to fund purchase-and-abolition of qualifying medical debt and to prohibit certain medical-debt reporting to consumer credit agencies, approving committee-recommended amendments and adopting two additional amendments clarifying covered services and the limited statutory use of the term “behavioral health.”

The measure includes a $1,000,000 one-time appropriation to the state treasurer for fiscal year 2026 to contract with a nonprofit that would acquire and abolish medical debt for eligible Vermont residents, the House Health Care Committee reported. Representative Page (member from Newport City), speaking for that committee, said the contractor would “purchase the medical debt from eligible debtors, abolish the debt with no cost or tax consequences for the debtor, [and] coordinate with health care providers or collection agencies to ensure that no information from the debt removal is applied to the debtor’s consumer credit report.”

The bill’s supporters told the chamber that medical debt is widespread and often arises from necessary care. Representative Page quoted the health care advocate: “the debt is not caused by individuals having a good time. It was not a mistake with one’s financials by overextending. The debt occurred simply by individuals getting sick.” Page also quoted the state treasurer as saying “1 in 10 Vermonters have medical debt.”

Why it matters: the bill aims both to remove specific debts from individuals’ obligations and to block reporting of that medical debt to credit reporting agencies — a change supporters said would reduce credit-related harms from medical events. It also attempts to limit reporting and transfers of medical debt by large health care facilities and to define eligibility and procedural safeguards for the debt-abolition program.

Key provisions and eligibility: the Health Care Committee’s summary, read on the floor, describes a $1,000,000 appropriation to the state treasurer to contract with a nonprofit to acquire and repay eligible debts. Eligibility for the program will be limited to Vermont residents with household income at or below 400% of the federal poverty level or whose medical debt equals 5% or more of household income and whose patient account balance remains outstanding after provider collection efforts. The committee also described existing hospital financial-assistance discounts: sliding-scale discounts at or below 250% of the federal poverty level and at least a 40% discount for some households between 250% and 400% of the federal poverty level.

The bill also proposes reductions to an existing fund cited on the floor: the committee report said $20,000,000 would be reduced to $19,000,000 to make $1,000,000 available for the medical debt effort.

Committee and floor action: Representative Page reported the House Health Care Committee approved S.27 with amendment and asked the chamber to support it. Representative Nigro (member from Bennington) spoke for Appropriations and reported a committee vote of "10 0 1" in favor, recommending support. Representative Feltes (member from Linden) reported Ways and Means reviewed the fiscal note and recommended approval; the fiscal office (JFO) was cited as saying there is no fiscal impact other than the appropriation.

Two floor amendments were adopted. Representative Black (member from Essex) and others offered a definition revision for “health care services” that expanded the list to include “medical, dental, behavioral health, mental health, substance use disorder treatment, surgical, psychiatric, therapeutic, diagnostic, preventative, rehabilitative, or supportive” services, “including medications.” That amendment was adopted by voice vote.

Representative Donahue (member from Northfield), joined by Representative Black, offered a second amendment that adds a statutory definition of “behavioral health” limited to usages unrelated to mental health and substance use disorder and explicitly excludes mental health and substance use conditions from the pejorative uses of the term. Donahue described the change as intended to avoid stigmatizing language while ensuring the statute’s scope is clear when other jurisdictions’ terminology is involved. The Health Care Committee reported a favorable vote on that amendment and the House adopted it.

Procedure and next steps: after the committee reports and amendment votes the House “proposed to the Senate to amend the bill as recommended by the committee on health care as amended,” and then ordered third reading. The House did not record a roll-call tally on the floor in the transcript; the actions were taken by voice vote.

What supporters and opponents said: supporters framed the bill as compassionate relief for residents driven into debt by necessary care and emphasized protections to prevent hospitals from selling debt in ways that would defeat abolition efforts. During questioning, members sought clarity about whether fertility treatments would be covered; Representative Black responded that, as drafted, fertility treatments would qualify if they generate allowable medical debt, noting the statute addresses debt abolition rather than insurance coverage.

Background and witnesses: the Health Care Committee’s report listed testimony from many organizations and officials, including the American Federation of Teachers (vice president for health care), the Leukemia & Lymphoma Society, the Vermont Bankers Association, the Vermont state treasurer, Vermont Legal Aid (including the chief health care advocate), Vermont Network Against Domestic and Sexual Violence, Vermont Association of Hospitals and Health Systems, Capstone Community Action, and others. Representative Page thanked those who testified.

Details to watch: the bill as reported delegates selection of the nonprofit contractor to the state treasurer; it requires notification to individuals whose debt was abolished that includes the amount of debt removed and the name of the health care provider. The effective date cited in committee text is January 2025. The House has proposed its amendments to the Senate; any final enactment will require subsequent Senate action and the governor’s signature.

Ending: With committee reports and the two floor amendments adopted, the House advanced S.27 and ordered third reading, sending the amended measure back to the Senate for consideration.