The Trump administration’s cuts to federal measures aimed at protecting Americans from overwhelming medical bills have shifted the focus of patient and consumer advocates to state legislatures in an effort to address the issue of medical debt in the country.
Despite some progress this year, particularly in states with Democratic majorities, recent setbacks in more conservative legislatures highlight the challenges of protecting patients.
Bills aimed at protecting consumers from medical debt in Indiana, Montana, Nevada, South Dakota, and Wyoming failed this year due to industry opposition. Advocates warn that states must take action as millions of people are expected to lose their health insurance due to President Donald Trump’s tax and spending law.
“Medical debt was already a key issue even before the change in administration in Washington,” said Kate Ende, policy director at the Maine-based organization Consumers for Affordable Health Care. “The federal rollback made mobilizing even more urgent.”
Maine recently joined a growing list of states that have banned medical debt from appearing on residents’ credit reports, a protection that can facilitate access to housing, a car, or even employment. The measure was unanimously approved with bipartisan support.
It is estimated that 100 million people in the United States have some form of medical debt.
The federal government was on the verge of banning medical debt from appearing on credit reports, thanks to a regulation issued in the final days of former President Joe Biden’s term. This measure would have benefited around 15 million people nationwide.
However, the Trump administration did not defend the regulation against legal challenges from collection agencies and credit bureaus, who argued that the Consumer Financial Protection Bureau had exceeded its authority.
A federal judge in Texas, appointed by Trump, ruled that the regulation should be overturned.
Now, only patients living in states that have enacted their own rules on credit reporting can benefit from this protection. More than a dozen states have these restrictions, including California, Colorado, Connecticut, Minnesota, New York, and Vermont, which, like Maine, adopted a ban this year.
In recent years, more states have passed other protections against medical debt, such as limits on the interest rate that can be charged and restrictions on the use of wage garnishment or asset seizure to collect unpaid medical bills.
In many cases, these measures have received bipartisan support, reflecting the popularity of consumer protections. In Virginia, the Republican governor signed a law this year limiting wage garnishment and establishing an interest rate cap.
Several Republican lawmakers in California joined Democrats to support a measure that facilitates access to financial assistance from hospitals for those facing high bills.
“This is the kind of common-sense issue that affects people’s wallets and appeals to both Republicans and Democrats,” said Eva Stahl, vice president of Undue Medical Debt, a nonprofit organization that buys and forgives medical debts and has worked to expand patient protections.
However, in several state legislatures, the push for new protections has faced barriers.
Bills to prohibit medical debts from appearing on credit reports failed in Wyoming and South Dakota, despite the support of some Republican lawmakers. Measures to limit aggressive collections against residents with medical debt were rejected in Indiana, Montana, and Nevada.
In some states, proposals faced strong opposition from collection agencies, credit bureaus, and banks, who argued to lawmakers that without information about medical debts, they could end up granting high-risk loans to consumers.
State Representative Lana Greenfield, a Republican from South Dakota, echoed the industry’s objections by urging her colleagues to vote against the ban. “Small banks in small communities would not be able to obtain information about a very, very large medical bill. And then, they could grant a good-faith loan to someone without really knowing what their credit was,” Greenfield said on the House floor.
During the Biden administration, CFPB researchers found that, unlike other types of debt, medical debt was not a good indicator of creditworthiness.
But State Representative Brian Mulder, a Republican from South Dakota and chairman of the health committee that drafted the legislation, highlighted the power of the banking sector in the state, where favorable regulations have made it a magnet for financial institutions.
In Montana, a proposal to protect some of the assets of debtors from garnishment easily advanced in committee. Its supporters hoped it would be especially useful for Native American patients, who disproportionately bear the burden of medical debt.
But when the bill reached the House floor, opponents “showed up in force” and personally lobbied Republican lawmakers an hour before the vote, said Ed Stafman, a Democratic lawmaker and the bill’s author.
“They gathered enough votes to narrowly defeat the bill,” he said.
Both patient advocates and lawmakers who supported these measures said they are optimistic about overcoming industry opposition in the future.
There are signs that some proposals to expand patient protections could advance in other conservative states, such as Ohio and Texas.
In Texas, a proposal that would require non-profit hospitals to expand financial assistance for those facing high bills has received the support of influential conservative organizations.
“These things sometimes take time,” said Lucy Culp, who leads state lobbying for Blood Cancer United (formerly known as Leukemia & Lymphoma Society). This organization has pushed for state laws to protect against medical debt in recent years, including in Montana and South Dakota.
Most concerning, said Culp, is the wave of uninsured patients expected due to cuts in medical coverage resulting from the new Republican tax law. This will further exacerbate the issue of medical debt in the country.
“States are not prepared for that,” Culp warned.
