THE SENATE	S.B. NO.	1040
THIRTY-THIRD LEGISLATURE, 2025		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

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 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 determinants of health and enhancing community well-being.

The purpose of this Act is to require the office of wellness and resilience to conduct a study on the feasibility of establishing a medical debt acquisition and forgiveness program in the State.

SECTION 2. (a) The office of wellness and resilience shall conduct a study on the cost and feasibility of establishing a program to acquire and forgive the medical debt of Hawaii residents who:

(1) Have a household income less than or equal to four hundred per cent of the federal poverty level for the State; or

(2) Have a medical debt balance greater than or equal to five per cent of their household income.

(b) In conducting the study, the office of wellness and resilience shall:

(1) Consider the experience of other states who have adopted medical debt acquisition and forgiveness program; and

(2) Consult with nonprofit health care systems or other organizations that have engaged with national nonprofits focused on eliminating medical debt.

(c) The office of wellness and resilience shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2026.

SECTION 3. This Act shall take effect on December 31, 2050.

Report Title:

OWR; Medical Debt Acquisition and Forgiveness; Study; Report

Description:

Requires the Office of Wellness and Resilience to conduct a study on the cost and feasibility of establishing a program to acquire and forgive medical debt owed by certain households in the State. Requires a report to the Legislature. Effective 12/31/2050. (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.