Requires the Office of Wellness and Resilience to develop, implement, and administer a Medical Debt Acquisition and Forgiveness Program to acquire and forgive outstanding medical debt for residents of the State, subject , the official text

THE SENATE

S.B. NO.

3025

THIRTY-THIRD LEGISLATURE, 2026

S.D. 2

STATE OF HAWAII

H.D. 3

C.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 in the State.
According to a 2022 report from the Peterson-KFF Health System Tracker,
more than one in twenty adults in the State have outstanding medical debt on
their credit report.  In states and
cities that have acquired and forgiven unpaid medical debt, most of the
forgiven debt was owed by those with health insurance, further suggesting that
despite many families in the State having health insurance coverage, inability
to pay medical debt is a serious problem.

The
legislature further 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 also finds and declares that the appropriation in this Act is in
the public interest and for the public health, safety, and general welfare of
the State.  Due to a rising cost of
living and a health care system built on a for‑profit model, many
families are never able to repay medical debt.

The
legislature recognizes that due to the significant amount of outstanding debt
owed to hospitals and other health care 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.

However,
the legislature further finds that twenty‑seven 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 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
legislature finds that a medical debt consolidation and cancellation non-profit
organization has already acquired the unpaid medical debt of 50,016 residents
of the State, totaling $91,310,664.  This
includes 39,401 individuals on Oahu, 6,654 individuals on Hawaii island, 3,597
individuals on Maui, Molokai, and Lanai, and three hundred sixteen individuals
on Kauai.

Accordingly,
the purpose of this Act is to authorize the office of wellness and resilience
to develop, implement, and oversee the administration of a medical debt
acquisition and forgiveness program to acquire and forgive outstanding medical
debt for certain Hawaii residents, subject to the availability of program
funds.

SECTION
2.  Chapter 346, Hawaii Revised Statutes,
is amended by adding a new section to part XXI to be appropriately designated
and to read as follows:

"§346-   Medical debt acquisition and forgiveness
program.  (a)
The office may develop, implement, and administer a medical debt
acquisition and forgiveness program to acquire and forgive outstanding medical
debt of residents of the State that is identified as available for acquisition,
subject to the availability of program funds.

(b)  The office may partner with
other relevant state agencies and programs to develop, implement, and
administer the program.

(c)  The program shall:

(1)  Acquire and forgive the medical debt
of individuals who are residents of the State:

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

(B)  With an adjusted gross income of
less than $100,000 who have a medical debt balance of not less than five per
cent of their household income; and

(2)  Ensure that any specific personally
identifiable information or protected health information is collected in
compliance with applicable federal and state laws, regulations, and rules, and
is used only for the purposes of acquiring and satisfying or discharging
medical debt, or providing financial education, insurance enrollment assistance,
preventive measures, or similar support services.  Information collected that is subject to this
paragraph shall be confidential and not disclosed under chapter 92F without the
consent of the individual or as otherwise provided by law.

(d)  The office may, without regard
to chapter 103D or 103F, as applicable, contract with entities that hold
existing medical debt of state residents and have demonstrated experience and
success partnering with hospitals and health systems in acquiring and
satisfying or forgiving outstanding medical debt on behalf of state and county
governments for the purposes of developing, implementing, and administering the
medical debt acquisition and forgiveness program.

(e)
Any acquisition and forgiveness of medical debt under the program shall
be negotiated to ensure the best possible value for the State.

(f)  The office may receive
appropriations from the legislature, private funds, or federal funds for the
purpose of acquiring and forgiving outstanding medical debt pursuant to this section."

SECTION 3.  The office shall
submit a report of its progress in developing, implementing, and administering
the medical debt acquisition and forgiveness program, including any proposed
legislation, to the legislature no later than twenty days prior to the
convening of the regular session of 2027.

SECTION
4.  There is appropriated out of the
general revenues of the State of Hawaii the sum of $500,000 or so much thereof
as may be necessary for fiscal year 2026-2027 for the office of wellness and
resilience to develop, implement, and administer the medical debt acquisition
and forgiveness program established pursuant to section 2 of this Act to
acquire and forgive outstanding medical debt for certain individuals who are
residents of the State; provided that the appropriation made by this Act shall
not lapse at the end of the fiscal biennium for which the appropriation is
made; provided further that all moneys from the appropriation unencumbered as
of June 30, 2028, shall lapse as of that date.

The
sum appropriated shall be expended by the office of wellness and resilience for
the purposes of this Act.

SECTION
5.  New statutory material is
underscored.

SECTION
6.  This Act shall take effect on July 1,
2026.