With the Trump administration scaling back federal efforts to protect Americans from medical bills they can’t pay, advocates for patients and consumers have shifted their work to contain the nation’s medical debt problem to state Capitols.
Despite progress in some mostly blue states this year, however, recent setbacks in more conservative legislatures underscore the persistent challenges in strengthening patient protections.
Bills to shield patients from medical debt failed this year in Indiana, Montana, Nevada, South Dakota, and Wyoming in the face of industry opposition. And advocates warn that states need to step up as millions of Americans are expected to lose insurance coverage because of President Donald Trump’s tax and spending law.
“This is an issue that had been top of mind even before the change of administrations in Washington,” said Kate Ende, policy director of Maine-based Consumers for Affordable Health Care. “The pullback at the federal level made it that much more important that we do something.”
This year, Maine joined a growing list of states that have barred medical debt from residents’ credit reports, a key protection that can make it easier for consumers to get a home, a car, or sometimes a job. The measure passed unanimously with bipartisan support.
An estimated 100 million adults in the U.S. have some form of health care debt.
The federal government was poised to bar medical debt from credit reports under regulations issued in the waning days of former President Joe Biden’s administration. That would have helped an estimated 15 million people nationwide.
But the Trump administration did not defend the regulations from lawsuits brought by debt collectors and the credit bureaus, who argued that the Consumer Financial Protection Bureau exceeded its authority in issuing the rules. A federal judge in Texas appointed by Trump ruled that the regulation should be scrapped.
Now, only patients in states that have enacted their own credit reporting rules will benefit from such protections. More than a dozen have such limits, including California, Colorado, Connecticut, Minnesota, New York, and Vermont, which, like Maine, enacted a ban this year.
Still more states have passed other medical debt protections in recent years, including caps on how much interest can be charged on such debt and limits on the use of wage garnishments and property liens to collect unpaid medical bills.
In many cases, the medical debt rules won bipartisan support, reflecting the overwhelming popularity of these consumer protections. In Virginia, the state’s conservative Republican governor this year signed a measure restricting wage garnishment and capping interest rates.
And several GOP lawmakers in California joined Democrats in support of a measure to make it easier for patients to access financial assistance from hospitals for big bills.
“This is the kind of commonsense, pocketbook issue that appeals to Republicans and Democrats,” said Eva Stahl, a vice president at Undue Medical Debt, a nonprofit that buys up and retires patients’ debts and has pushed for expanded patient protections.
But in several statehouses, the drive for more safeguards hit walls.
Bills to ban medical debts from appearing on credit reports failed in Wyoming and South Dakota, despite support from some GOP lawmakers. And measures to limit aggressive collections against residents with medical debt were derailed in Indiana, Montana, and Nevada.
In some states, the measures faced stiff opposition from debt collectors, the credit reporting industry, and banks, who told legislators that without information about medical debts, they might end up offering consumers risky loans.
In Maine, the Consumer Data Industry Association, which represents credit bureaus, told lawmakers that regulating medical debt should be left to the federal government. “Only national, uniform standards can achieve the dual goals of protecting consumers and maintaining accurate credit reports,” warned Zachary Taylor, the group’s government relations director.
In South Dakota, state Rep. Lana Greenfield, a Republican, echoed industry objections in urging her colleagues to vote against a credit reporting ban. “Small-town banks could not receive information on a mega, mega medical bill. And so, they would in good faith perhaps loan money to somebody without knowing what their credit was,” Greenfield said on the House floor.
Under the Biden administration, CFPB researchers found that medical debt, unlike other debt, was not a good predictor of creditworthiness.
But South Dakota state Rep. Brian Mulder, a Republican who chairs the health committee and authored the legislation, noted the power of the banking industry in South Dakota, where favorable regulations have made the state a magnet for financial institutions.
In Montana, legislation to shield a portion of debtors’ assets from garnishment easily passed a committee. Supporters hoped the measure would be particularly helpful to Native American patients, who are disproportionately burdened by medical debt.
But when the bill reached the House floor, opponents “showed up en masse,” talking one-on-one with Republican lawmakers an hour before the vote, said Rep. Ed Stafman, a Democrat who authored the bill. “They lassoed just enough votes to narrowly defeat the bill,” he said.
Advocates for patients and legislators who backed some of these measures said they’re optimistic they’ll be able to overcome industry opposition in the future.
And there are signs that legislation to expand patient protections may make headway in other conservative states, including Ohio and Texas. A proposal in Texas to force nonprofit hospitals to expand aid to patients facing large bills picked up support from leading conservative organizations.
“These things can sometimes take time,” said Lucy Culp, who oversees state lobbying efforts by Blood Cancer United, formerly known as the Leukemia & Lymphoma Society. The patients’ group has been pushing for state medical debt protections in recent years, including in Montana and South Dakota.
More concerning, Culp said, is the wave of uninsured patients expected as millions of Americans lose health coverage due to cutbacks in the recently passed GOP tax law. That will almost certainly make the nation’s medical debt problem more dire.
“States are not ready for that,” Culp said.
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
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