Pritzker Signs Bills to Relieve
Nearly $1 Billion in Medical Debt for Illinoisans
Also prohibits medical debt from being
factored in credit report scores
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[July 02, 2024]
Governor
JB Pritzker has signed two pieces of legislation targeted at
reducing the negative impact of medical debt on Illinoisans. HB5290,
the medical debt forgiveness bill, dedicates approximately $10
million in state funding to purchase outstanding Illinois medical
debt with the goal of erasing nearly $1 billion of medical debt in
collections for Illinois residents. SB2933 makes medical debt
ineligible to be included on a credit report, an action that is also
being proposed at the federal level by the Biden administration.
“No Illinoisan should face financial ruin after receiving the
medical care they need,” said Governor JB Pritzker. “These two
pieces of legislation work to ensure that medical debt is not a
lifetime sentence of poverty, and that Illinoisans who are
struggling under current debts have an opportunity to get back on a
strong financial path as they heal.”
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Governor Pritzker first proposed a medical debt
buyback program during his FY25 State of the State and Budget
Address. Because outstanding medical debt can be purchased from
creditors for pennies on the dollar, a $10 million state investment
will have a return of nearly 100 dollars for each dollar spent on
buying back debt. This program is anticipated to impact over 340,000
low-income Illinoisans. In 2022, Cook County President Toni
Preckwinkle created the Cook County Medical Debt Relief Initiative
to abolish more than $382 million in medical debt for over 213,000
county residents.
The state will partner with Undue Medical Debt to negotiate the sale
of debt portfolios, the same organization used by Cook County and
governments across the country for similar debt forgiveness
programs. Medical debt disproportionately affects people of
color—Black Illinoisans are 50% more likely to accrue medical debt
than their white peers.
This FY25 investment in medical debt relief will be distributed
following individual negotiations with hospital systems and other
medical debt holders in a first-of-its-kind State program
administered by the Illinois Department of Healthcare and Family
Services. Illinois residents will not need to apply for this
benefit; impacted households will receive notification letters after
their debts have been erased, likely starting in the Fall of 2024.
More than 1.75 million Illinois residents (earning 400% or less of
Federal Poverty Limits or whose medical debt exceeds 5% of their
annual household income) carry an estimated $4 billion of erasable
medical debt.
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In addition to the financial and
psychological burden of medical debt, the outstanding debts can
also have a serious impact on credit reports, affecting one’s
ability to rent, obtain a loan, or apply for a line of credit.
SB2933 amends the Consumer Fraud and Deceptive Business Practice
Act to prohibit credit agencies from including negative
information about medical debt in credit reports. Both bills
received bipartisan support from the General Assembly and will
go into immediate effect.
"These pieces of legislation represent a monumental step forward in
addressing the critical issue of medical debt," said Cook County
Board President Toni Preckwinkle. "By erasing medical debt and
ensuring it doesn't impact credit scores, we are promoting equity
and justice for all Illinoisans, especially our Black and Brown
communities who are disproportionately affected. This initiative
mirrors the success of the Cook County Medical Debt Relief
Initiative, and I am proud to see the state expanding on these
efforts. Every individual deserves the dignity of financial security
and the right to heal without the looming threat of debt."
"As part of this budget passage, I was proud to champion and pass
House Bill 5290, to create a new Medical Debt Relief Program, which
will wipe out medical debt for an estimated 340,000 people across
Illinois,” said Rep. Kelly Cassidy (D-Chicago). “People should not
have to experience debt to obtain medical assistance. A right to a
healthy life should never be based on income. We must continue to
strive for equality in our medical system, as that is simply the
right thing to do."
“Eliminating medical debt is a life-changing opportunity for folks
burdened with overwhelming medical bills,” said Sen. Mike Simmons
(D-Chicago). “I am beyond proud to stand with Governor Pritzker in
giving Illinois families control of their financial future without
the burden of medical debt holding them back.”
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“Medical debt can severely and unexpectedly impact an
individual’s finances at no fault of their own,” said Rep. Maurice
West (D-Rockford). “When people rely on credit reports to access
necessities like housing, they should not be unfairly penalized by
the high cost of medical treatment. Instead of enabling credit
reports to further bury a person with higher interest and more debt,
let’s take a more responsible and compassionate path forward.”
“Medical debt is not a good indicator of one’s ability to pay their
bills – therefore, it should not dictate a person’s financial
future,” said Senator Steve Stadelman (D-Rockford). “This law is a
significant step toward financial fairness and peace of mind for our
residents.”
[Office of the Governor JB Pritzker] |