An Act to create 20.435 (1) (fr), 71.05 (6) (b) 57. and 146.691 of the statutes; Relating to: medical debt abolition and making an appropriation. (FE)
Summary
AB1168 creates a state medical debt abolition program within the Department of Health Services and appropriates $10 million in each of fiscal years 2025-26 and 2026-27 for that purpose. The department would be authorized to identify eligible Wisconsin residents, review medical debt accounts offered for sale by commercial debt collectors and health care providers, negotiate purchases of that debt, and then abolish it. The bill also allows DHS to contract with an experienced nonprofit organization to carry out these functions.
Eligibility is limited to Wisconsin residents who either have household income at or below 400% of the federal poverty line or whose medical debt equals at least 5% of annual household income. “Medical debt” is defined as an obligation arising from health care services. The bill directs DHS to prioritize outreach to safety-net hospitals and to focus purchases on providers with large Medicaid populations and on zip codes disproportionately affected by medical debt. After debt is abolished, the department must notify the resident within 60 days and may not seek payment from the resident for debt purchased under the program.
Impact
The bill would create a new statutory section, s. 146.691, establishing a state-run process for buying and canceling qualifying medical debt. It also adds a tax provision excluding discharged debt under this program from Wisconsin taxable income beginning with tax years after December 31, 2025, and includes a budget appropriation to fund the program through DHS. In practical terms, the bill would shift certain medical debts from private collection to state-funded cancellation, while reducing or eliminating state income tax consequences for affected residents.
Sentiment
The available context shows the bill was introduced and referred to the Assembly Committee on Health, Aging and Long-Term Care, with no recorded committee debate or votes yet. The bill’s structure suggests a generally supportive policy approach toward relieving medical debt burdens, especially for lower-income residents and communities disproportionately affected by medical debt. Because no transcripts or votes are provided, there is no documented opposition or support beyond the bill’s sponsorship and referral status.
Contention
The main policy questions raised by the bill are fiscal and administrative rather than partisan in the available record. Potential points of contention include the $20 million total appropriation over two fiscal years, whether state funds should be used to purchase private medical debt, and the mechanics of determining eligibility and prioritizing providers and zip codes. The bill also anticipates tax-related issues by directing DHS to minimize tax liability and by excluding discharged debt from income, indicating concern about unintended tax consequences for residents.
Crossfiled
An Act to create 20.435 (1) (fr), 71.05 (6) (b) 57. and 146.691 of the statutes; Relating to: medical debt abolition and making an appropriation. (FE)
Making Appropriations To Provide For The Expenses Of The Legislature, The Auditor, The Legislative Reference Bureau, The Ombudsman, And The Ethics Commission.
Making Appropriations To Provide For The Expenses Of The Legislature, The Auditor, The Legislative Reference Bureau, The Ombudsman, And The Ethics Commission.