In this 2011 file photo, a cancer patient’s medical bills lie on a kitchen table at a home in Salem, Virginia. A new Trump administration rule would override more than a dozen state laws that protect consumers’ credit reports from medical debt. (Photo by Don Petersen/Associated Press)
A new Trump administration rule issued behind schedule last month would override state laws that prevent consumers’ credit reports from including medical debt, potentially weakening financial protections for millions of Americans.
In recent years, more than a dozen states have taken steps to prevent medical debt from affecting residents’ credit scores and have passed legislation with bipartisan support. But new Instructions from the Federal Consumer Financial Protection Bureau cancels a Biden-era rule that allowed states to impose their own bans. The Trump administration has interpreted The Fair Credit Reporting Act of 1970 says it overrides state laws regarding reporting debts to credit bureaus.
At least American consumers had $220 billion in unpaid medical bills in 2024, according to an analysis by the non-profit research organization KFF. About 6% of American adults, or 14 million people, have medical debt of more than $1,000.
“Medical debt is a tremendous weight that holds so many families back from financial security, and unlike most other forms of debt, it is not a choice,” North Carolina Gov. Josh Stein, a Democrat, said in a statement last month opinion with the announcement that a new government program had been eliminated more than $6.5 billion in medical debt for more than 25 million North Carolina residents.
People rarely plan to take on medical debt as they do when they borrow money to buy a home or a car. A one-time or short-term expense For example, a single hospital stay accounts for about two-thirds of all medical debt, according to a 2022 Consumer Financial Protection Bureau report.
And although Most Americans have health insuranceMany face unexpected medical bills because their policies have high deductibles or do not fully cover some treatments, procedures or medications. People with poorer health and those with a disability are more likely to report medical debt, as are middle-aged adults, Black Americans and low- and middle-income people, according to KFF.
In the last two years a dozen states have passed laws prohibiting mention of medical debt on credit reports, bringing the total number of states with such laws to 14: California, Colorado, Connecticut, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, North Carolina, Rhode Island, Vermont, Virginia and Washington.
According to the nonprofit Commonwealth Fund, another five states—Delaware, Florida, Idaho, Nevada and Utah—restrict how and when medical debt can appear on credit reports.
Republican and Democratic lawmakers in other states, including Michigan, Ohio And South Dakotahave introduced similar bills this year.
Now the new state laws face an uncertain future. In January, while Biden was still in office, the Consumer Financial Protection Bureau finalized a rule Ban on credit reporting agencies excluded from reporting medical debt under certain circumstances. Credit reporting agencies and credit unions sued to stop the rule. The new Trump administration agreed with the plaintiffs and declined to defend the rule in courti.e. a federal judge blocked it.
Maine State Senator Donna Bailey, a Democrat, said in September opinion that Maine’s new law banning the disclosure of medical debt in consumer reports was even more critical given the decline of federal regulation.
“Although Americans no longer enjoy federal protections, Mainers will continue to enjoy protections here in our state,” she said in September. “When we go to the hospital for medical care, especially in emergencies, any debt should not stop us from buying a car, renting a house or taking out a loan.”
But the Trump administration’s latest order would invalidate state laws like Maine’s.
Stateline reporter Anna Claire Vollers can be reached at avollers@stateline.org.
This story was originally produced by State borderwhich is part of States Newsroom, a nonprofit news network that includes West Virginia Watch, and is a 501c(3) public charity supported by grants and a coalition of donors.
