From WisPolitics.com/WisBusiness.com …
— Two Milwaukee-area Democrats are proposing a state-funded medical debt abolition program, arguing it could get rid of hundreds of millions of dollars in debt for “a fraction of its face value.”
Sen. Dora Drake and Rep. Priscilla Prado this week sent a co-sponsorship memo for LRB-6421, seeking support for their proposed program within the state Department of Health Services.
“Medical debt should not follow Wisconsin families for years after they have recovered from illness or injury,” they wrote.
The bill would provide $10 million to the agency in each of the fical years 2025-26 and 2026-27, to purchase the medical debt of Wisconsin residents from commercial debt collectors and health care providers, according to the Legislative Reference Bureau. Authors note medical debt is often sold on secondary markets “for pennies on the dollar.”
The agency would be tasked with abolishing the medical debt in a way that “minimizes the effect on the eligible resident’s tax liability,” and wouldn’t be able to seek payment from an eligible resident for their medical debt. The legislation also includes a provision on related exclusions for calculating state income tax.
The debt relief program would only be available to state residents whose household income is at or below 400% of the federal poverty level, or who has medical debt equal to 5% or more of their household income, the memo shows.
Authors note medical debt is one of the top causes of financial hardship for state residents, adding those with medical debt are less likely to get important medical care. Nearly 400,000 residents have some form of medical debt, according to the memo.
Wisconsin also has racial disparities when it comes to medical debt, authors say, referencing a statewide survey that found 58% of respondents of color reported going into debt, depleting savings or going without other needs due to medical bills. For white residents, the percentage was 35%.
Other states have established medical debt relief programs in recent years. That includes Illinois, which has gotten rid of more than $400 million medical debt last year alone, the state announced.
The co-sponsorship deadline is Monday.
See the bill text.
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