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Gov. Pritzker Signs Law to Wipe Out Nearly $1 Billion in Medical Debt. Governor JB Pritzker has signed two crucial pieces of legislation aimed at reducing the burden of medical debt on Illinois residents. The first, HB5290, allocates $10 million in state funds to purchase and forgive nearly $1 billion of medical debt currently in collections. The second, SB2933, prohibits the inclusion of medical debt on credit reports, aligning with similar federal efforts proposed by the Biden administration.
“No Illinoisan should face financial ruin after receiving the medical care they need,” said Governor Pritzker. “These two pieces of legislation ensure that medical debt doesn’t lead to a lifetime of poverty and that struggling Illinoisans have a chance to regain financial stability as they recover.”
The medical debt forgiveness initiative was first introduced by Governor Pritzker during his FY25 State of the State and Budget Address. The state plans to buy back medical debt from creditors at discounted rates, which allows each dollar of the $10 million investment to potentially erase nearly $100 of debt. This initiative is expected to benefit over 340,000 low-income residents across Illinois. Notably, a similar effort by Cook County in 2022 eliminated over $382 million in medical debt for 213,000 residents.
To implement the debt forgiveness program, Illinois will partner with Undue Medical Debt, an organization that has successfully managed similar programs nationwide. The Illinois Department of Healthcare and Family Services will oversee the program, negotiating with hospital systems and other debt holders. Residents will not need to apply for the benefit; instead, eligible households will receive notification letters once their debts are forgiven, starting in Fall 2024.
Medical debt disproportionately impacts people of color, with Black Illinoisans being 50% more likely to incur medical debt than their white counterparts. In Illinois, over 1.75 million residents, earning 400% or less of the Federal Poverty Level or whose medical debt exceeds 5% of their annual household income, carry approximately $4 billion in medical debt that could be forgiven.
SB2933, the second piece of legislation, will prevent credit agencies from reporting medical debt, helping protect Illinoisans’ credit scores from being unfairly impacted by medical expenses. This measure received strong bipartisan support and will take effect immediately.
Toni Preckwinkle, Cook County Board President, praised the new laws, stating, “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.”
Other lawmakers also celebrated the passage of these bills, emphasizing the importance of financial security and fair treatment for all Illinois residents. These new laws represent a significant step forward in creating a more compassionate and equitable healthcare system.
