Gov. JB Pritzker signed two proposals into law Tuesday to erase $1 billion of medical debt for low-income Illinoisans and prohibit credit rating agencies from including medical debt in credit reports. Sponsors believe the new laws will give Illinois families control of their financial future without unnecessary burdens.
According to our news partners at WAND TV, 14% of people in Illinois have medical debt in default. However, Pritzker and lawmakers on both sides of the aisle know nearly 20% of communities of color across the state experience extreme medical debt.
Pritzker hopes to eliminate $4 billion of medical debt for 1 million Illinoisans over the next four years. Democrats included $10 million in the Fiscal Year 2025 budget to eliminate $1 billion of medical debt for over 340,000.
“Across our nation, individuals and their families are forced to reckon with near impossible financial choices as the price tag on healthcare continues to increase,” Pritzker said. “When an emergency arises, the cost of care is not an optional expense.”
Medical debt
Roughly 20% of US households report that they have medical debt, according to the Consumer Financial Protection Bureau.
People will qualify for the debt relief program if their household income is below 400% of the federal poverty level or medical debt amounts to 5% or more of their annual household income.
“We’re talking about households with health insurance and even middle income struggle underneath the weight of medical debt,” said Audra Wilson, President and CEO of the Shriver Center on Poverty Law. “It is crushing. It is massive, and that is why this initiative is so significant.”
Illinois will also now prohibit consumer reporting agencies from including medical debt in credit reports. Sen. Steve Stadelman (D-Rockford) said the law will ensure people are not unfairly penalized for needing medical care or struggling to pay healthcare costs.
“This legislation, I want to stress, does not mean consumers don’t have to pay that medical debt and their medical bills,” Stadelman said. “I just believe medical debt is different than other debt. It’s spontaneous.”
Sponsors said this change is a major step toward financial fairness and peace of mind for consumers.
Both plans gained strong bipartisan support this spring and took effect immediately.
Illinois will partner with the organization Undue Medical Debt to negotiate the debt forgiveness program. Cook County and local governments across the country have implemented similar relief programs with the same organization.
“People should not have to experience debt to obtain medical assistance,” said Rep. Kelly Cassidy (D-Chicago). “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.”