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Senate advances bill to buy down medical debt, bar most medical debt from credit reports
Summary
The Vermont Senate amended and advanced S.27, a bill that would appropriate $1 million for nonprofits to purchase and abolish qualifying medical debt and generally prohibit most medical debt from consumer credit reports, with eligibility limits and exceptions detailed in committee reports.
The Vermont Senate on March 19 advanced S.27, an act relating to medical debt relief and excluding medical debt from credit reports, moving the bill forward after committee debate and amendments.
The bill, reported by Senator Cummings for the Committee on Health and Welfare, would authorize the state treasurer to use $1 million to contract with a nonprofit to buy and abolish qualifying medical debt. Cummings said the investment "can buy down about $10,000,000 in medical debt for people in Vermont." The aid would target households at or below 400% of the federal poverty level or those whose medical debt equals 5% or more of household income and only where routine collection efforts by the provider have already occurred.
Supporters told the committee the funds would come from an existing $20 million appropriation the treasurer holds; the bill would draw $1 million from that balance. The Appropriations Committee reported it supports using $1 million for this purpose but said the final source (BAA or another appropriation) will be resolved in appropriations work.
The bill also seeks to prohibit most medical debt information from being included in consumer credit reports. Amendments narrow that prohibition to exclude veterinary debt and debt charged to general-purpose credit cards, home-equity lines of credit and secured debt, while allowing reporting for medical debt on a credit card issued solely for medical care. The bill would also allow a nonprofit that purchases debt to access a consumer credit report with the consumer's consent for eligibility determination, and would permit a large health care facility to sell debt to a nonprofit that will abolish it.
The Senate discussion included questions about whether the nonprofits involved charge fees (reporters said such fees are expected and would be negotiated by the treasurer) and whether the bill distinguishes discretionary from non-discretionary medical care (the committee did not include such a distinction). Senators also asked whether buying down debt is the best use of public funds versus making debt uncollectible; Health and Welfare members said that was beyond the scope of the bill and that the measure addresses needs under the current system.
By the end of floor discussion the Senate amended the bill per committee recommendations and ordered the bill for third reading.
Votes at the time of the floor action were recorded as committee recommendations carried; the transcript records the Appropriations Committee vote as 7-0 and Health & Welfare as 5-0. The bill as amended would take effect July 1, 2025 for statutory provisions and spend authority timing is subject to appropriations resolution.
The bill text and fiscal analysis are on the Senate calendar; committee witnesses included the treasurer's office, nonprofit debt‑abolition providers, banking representatives and Joint Fiscal Office analysts.
The measure next returns for third reading where the Senate will take final passage votes.
