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
SB1132 would create a state-funded medical debt abolition program within the Department of Health Services (DHS). The bill appropriates $10 million in each of fiscal years 2025-26 and 2026-27 for DHS to purchase qualifying medical debt from commercial debt collectors and health care providers and then extinguish that debt. DHS could also contract with a nonprofit organization experienced in locating, purchasing, and abolishing medical debt to carry out the program.
The bill defines eligible residents as Wisconsin residents with household income at or below 400% of the federal poverty line, or residents whose medical debt equals at least 5% of annual household income. “Medical debt” is defined as an obligation arising from health care services. DHS or its contractor would identify eligible residents, review accounts offered for sale, conduct outreach to providers, prioritize purchases from providers with large Medicaid patient populations and from zip codes disproportionately affected by medical debt, and notify residents within 60 days after their debt is abolished. The bill also bars DHS or its contractor from seeking payment from residents for debt purchased and abolished under the program.
Impact
SB1132 would create new statutory authority in chapter 146 for medical debt abolition and add a new state income tax exclusion for discharged debt under the program. It would also appropriate general purpose revenue to DHS for the program and require annual reporting to the governor and legislative committees on the amount of debt abolished, the number and demographics of residents helped, and the characteristics of participating providers. In effect, the bill would shift qualifying medical debt from private collection to state-funded cancellation and reduce or eliminate related tax consequences for affected residents.
Sentiment
The available record shows no committee testimony or recorded votes, so there is no direct evidence of legislative debate or partisan alignment in the materials provided. Based on the bill’s sponsorship and structure, the proposal appears to be framed as consumer relief and health equity legislation aimed at reducing the burden of medical debt on lower-income residents and communities disproportionately affected by it. The inclusion of reporting requirements and provider prioritization suggests an emphasis on targeting aid and documenting outcomes.
Contention
The main points of potential contention are likely fiscal cost, the use of state funds to purchase private debt, and the policy choice to intervene in the medical debt market. The bill’s requirement that DHS prioritize certain providers and geographic areas could also draw scrutiny over fairness and implementation. Another possible issue is the tax treatment of discharged debt, since the bill explicitly excludes forgiven amounts from state income tax calculations and notes that it may be referred to the Joint Survey Committee on Tax Exemptions. No specific objections or supporters were captured in the provided transcripts or votes.
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.