Michigan Senate OKs medical debt plan to cap interest, limit collections

Michigan Senators approved two bill packages Wednesday limiting how and when hospitals and debt collectors can go after unpaid bills
Gov. Gretchen Whitmer called for passing the policies as part of her final State of the State address in February
All five bills now move over to the state House, where they await further consideration

State Sen. Jonathan Lindsey, R-Coldwater. (Courtesy of Michigan Senate Republicans)

LANSING — A bipartisan push to help Michiganders facing medical debt by reforming how and when hospitals or collectors can go after unpaid bills is one step closer to reality.

The state Senate on Wednesday approved legislation that would cap medical debt interest, bar wage garnishments, foreclosures or arrests over unpaid debts and require hospitals to develop payment assistance plans.

“The bills before us represent a good, bipartisan effort at tackling a real, serious problem the people of Michigan face,” Sen. Jonathan Lindsey, a Coldwater Republican who sponsored two bills in the package, said before the votes.

The legislation now heads to the Michigan House, where Speaker Matt Hall has not committed to a vote. “I like the issue, but it’s incomplete,” Hall, R-Richland Township, said later Wednesday.

Nationally, medical debt affects more than 100 million Americans who owe a combined $220 billion, according to a 2024 memorandum from the US Consumer Financial Protection Bureau. State officials estimated around 700,000 Michiganders struggle with medical debt as of last year.

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Under Senate Bills 701 and 702, both approved unanimously, large health care facilities or medical debt collectors would be prevented from arresting, garnishing wages or foreclosing upon someone’s property to recoup debt.

The legislation also would:

Bar health care facilities or medical debt providers from charging interest or assessing late fees on a medical debt within 90 days after the final invoice.
Prohibit a large health care facility or medical debt buyer from charging a late fee or interest that exceeds 3% of the amount of that medical debt per year.
Ban deferring, denying or requiring a patient to fully pay their medical debt before providing urgent services.
Require a health care facility to, within 60 days, refund a patient who had paid more money than was owed on medical debt after financial assistance was applied.

Gov. Gretchen Whitmer called for medical debt reforms last month during her final State of the State address, urging the Legislature to work with her on similar reforms before she leaves office at the end of the year.

“Being sick or getting hurt shouldn’t also mean going broke,” Whitmer said in her Feb. 25 address.

Other bills approved by the Senate on Wednesday would create a new Hospital Financial Assistance Act and a new Medical Debt Act.

Under Senate Bill 449, hospitals would be required to develop, implement and clearly publish information about a financial assistance program for patients of their facility based on their incomes starting in 2027.

The bill, approved in a 33-2 vote, would also require hospitals to submit an annual report on the financial assistance program to the state Department of Health and Human Services by October 2027, with fines and fees possible for hospitals that fail to follow the act.

SB 450, also passed 33-2, would specify the power a hospital’s board of trustees has in determining a patient’s need for financial assistance under the Hospital Financial Assistance Act.

“For far too many, medical debt isn’t just a one-time bill,” said sponsoring Sen. Sarah Anthony, D-Lansing. “It can damage credit, threaten housing and wages, and turn a health crisis into a long-term financial stress.”

SB 451, which passed in a 27-8 vote, would subsequently prohibit a consumer reporting agency from making a report that contains a person’s medical debt information.

Medical creditors or debt collectors would also be barred from communicating with or reporting any information to a consumer reporting agency regarding a person’s medical debt.

Hall, the GOP House Speaker, said House Republicans are also “very concerned” about medical debt but did not commit to the Senate legislation.

He urged action on hospital price transparency, saying he felt the issues “fit together well,” and said he wants to see movement on bills to renew Michigan’s participation in the Interstate Medical Licensure Compact which would otherwise jeopardize the licensure of 8,000 practicing doctors across the state.