Plan to erase $91M in medical debt for Hawaii families heads to governor

HONOLULU (HawaiiNewsNow) – The state is preparing to erase nearly $100 million in medical bills owed by Hawaii residents.

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Despite employer-paid health insurance and government health care programs, it’s estimated that about 50,000 Hawaii families still have unpaid medical debt.

They may soon get relief if the governor signs Senate Bill 3025 into law.

Supporters say the effort could help people struggling with both poor health and damaged credit.

State Sen. Chris Lee, D-Waimanalo, Kailua, said, “This is significant, and if we do it right, we’ll be life-changing for these families.”

A survey by the University of Hawaii and the state Office of Wellness and Resilience found $91 million is owed. The survey found 19% of families owe more than $500, and that many delay seeking care due to the cost.

Tia Hartsock of the Hawaii Office of Wellness and Resilience said delaying care can have consequences.

“Which means that when people delay getting medical care, their condition could get worse,” Hartsock said.

Matt Prellberg of the Holomua Collaborative said medical debt can affect a person’s financial future.

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“Having this medical debt on your credit report may prevent you from getting housing, may prevent you from getting other loans, and having forgiveness of your medical debt can really open you up to the economy,” Prellberg said.

The bill would provide $500,000 to the national nonprofit Undue Medical Debt, which works with donors and government agencies to buy medical debt held by creditors or collection agencies.

Lee said medical debt can be bought “for pennies on the dollar,” allowing a smaller amount of funding to erase a larger total.

Prellberg said, “I think that such a number for such a small amount of only $500,000 to allow that money to go back into the economy and to give folks just a little bit of weight off their shoulders is going to make a really big impact.”

To qualify, an individual must either earn at or below 400% of the federal poverty level — a limit of about $140,000 for a Hawaii family — or have medical debt that exceeds 5% of their income.

Hartsock says the state will look closely at how other states have implemented this to prevent people from taking advantage of it.

If signed, Lee said the program could be up and running next year and debt could be erased without consumers having to apply.

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