Hawaii SB 1040: RELATING TO MEDICAL DEBT.

Bill Text

THE SENATE
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
JAN 1 7 2025
S.B. NO. 040
A BILL FOR AN ACT
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RELATING TO MEDICAL DEBT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that medical debt has
become a widespread issue across the United States.
Approximately four out of every ten Americans, including
individuals with health insurance, have some form of medical
debt. According to a 2022 report from the Peterson-KFF Health
System Tracker, approximately three million Americans have
medical debt in amounts exceeding $10,000. Although Hawaii
residents generally have less medical debt than residents in
other states, approximately one in ten residents have
outstanding medical debt on their credit report. In other
states and cities that have acquired and forgiven unpaid medical
debt, most of the forgiven debt was owed by those with health
insurance, indicating that many families in the State may also
have medical debt, despite having health insurance coverage.
The legislature also finds that medical debt is a social
determinant of health as patients with burdensome medical debt
often delay the care they need, may experience issues obtaining
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S.B. NO.
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employment and housing, have difficulty escaping poverty, and
experience increased mental stress. The legislature recognizes
that due to the significant amount of outstanding debt owed to
hospitals and service providers, a secondary market has emerged
in which commercial debt buyers purchase outstanding and dormant
debt owed to health care providers and take aggressive action to
collect from families who find themselves unable to pay, further
exacerbating the severity of the medical debt crisis.
The legislature further finds that other states and cities
in the United States have partnered with a nonprofit
organization that has successfully purchased billions of dollars
in medical debt from health care providers and collection
agencies for about 0.01 per cent of the overall cost and
abolished the respective patients' debts altogether. Health
care providers whose owed debt is sold to third parties for
abolishment can equally benefit by receiving revenue for dormant
patient accounts, while mitigating the effects of social
determinant of health and enhancing community well-being.
Accordingly, the purpose of this Act is to require the
office of wellness and resilience to develop, implement, and
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S.B. NO. OCD
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administer a program to acquire and forgive outstanding medical
debt.
SECTION 2. (a) The office of wellness and resilience
shall develop, implement, and administer a medical debt
acquisition and forgiveness program to acquire and forgive
outstanding medical debt for households in the State.
(b) The program shall:
(1) Acquire and forgive the medical debt of households
with a household income not to exceed four hundred per
cent of the federal poverty level for the State, or
households with a medical debt balance greater than or
equal to five per cent of their household income; and
(2) Ensure that any specific personal identifying
information or health data is collected in compliance
with the Health Insurance Portability Act and
Accountability of 1996, as amended, and is used for no
purpose other than the acquisition and forgiveness of
medical debt, and provision of financial education,
insurance, preventative measures, or similar
assistance.
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(c) The office of wellness and resilience shall contract
with an entity with demonstrated experience and success
partnering with hospitals and the Hawaii health systems
corporation or any of its regional systems in acquiring and
forgiving outstanding medical debt on behalf of state and
municipal governments.
(d) The office of wellness and resilience may receive
appropriations from the legislature, private funds, federal
funds for the purpose of acquiring and forgiving outstanding
medical debt for the purposes of this Act.
(e) The office of wellness and resilience shall submit a
report of its findings and recommendations on the medical debt
acquisition and forgiveness program, including its progress, to
the legislature no later than twenty days prior to the convening
of each regular session. The report shall also include an
analysis of actions taken by other states in the preceding year
which are reasonably related to the cancellation of medical
debt, including prohibiting medical debt from appearing on
credit reports, and any related recommendations, including any
proposed legislation.
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SECTION 3.
S.B. NO. Io4o
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There is appropriated out of the