State Efforts to Protect Patients from Medical Debt
By: Noam N. Levey, Katheryn Houghton, and Arielle Zionts
In the wake of the Trump administration’s rollback of federal protections against medical debt, advocates for patients and consumers are turning to state legislatures to address the nation’s growing medical debt crisis. While progress has been made in some predominantly blue states, conservative legislatures are posing challenges to strengthening patient protections.
This year, bills aimed at shielding patients from medical debt failed in several states, including Indiana, Montana, Nevada, South Dakota, and Wyoming, facing opposition from the healthcare industry. With millions of Americans expected to lose insurance coverage due to changes in federal tax and spending laws, the need for state-level action has become even more urgent.
Maine recently passed a bipartisan measure to prevent medical debt from appearing on residents’ credit reports, joining a growing number of states with similar protections. An estimated 100 million adults in the U.S. currently have some form of healthcare debt, highlighting the widespread impact of this issue.
The federal government was on the verge of implementing regulations to bar medical debt from credit reports under the Biden administration, but the rules were scrapped following legal challenges. As a result, only patients in states with their own credit reporting regulations will benefit from such protections. States like California, Colorado, Connecticut, Minnesota, New York, and Vermont have already enacted bans on medical debt reporting.
Despite some setbacks, many states have passed laws to limit interest rates on medical debt and restrict aggressive collections practices. In Virginia, a conservative Republican governor signed a measure to protect patients from excessive wage garnishment and high interest rates. In California, bipartisan support was seen for legislation to improve access to financial assistance for medical bills.
Industry opposition has been a significant hurdle in advancing patient protections in some states. Debt collectors, credit reporting agencies, and banks have raised concerns about the impact of limiting information on medical debts, arguing that it could lead to risky lending practices. However, research from the Consumer Financial Protection Bureau has shown that medical debt is not a reliable indicator of creditworthiness.
Advocates remain hopeful that future efforts to expand patient protections will succeed, despite industry resistance. There are indications that conservative states like Ohio and Texas may be open to strengthening medical debt regulations. In Texas, a proposal to require nonprofit hospitals to provide more assistance to patients facing large bills has gained support from prominent conservative organizations.
As the number of uninsured patients is expected to rise due to changes in federal healthcare policies, the importance of state-level action to address medical debt cannot be overstated. Advocates stress the need for proactive measures to protect patients from financial hardship and ensure access to affordable healthcare for all.
