Trump Management Challenges State Efforts to Protect Credit Scores from Medical Debt
WASHINGTON – The Trump administration is actively opposing state-level laws designed to shield consumers’ credit scores from the negative impact of medical debt, reversing course on protections previously pursued under the biden administration. This challenge comes despite widespread concern over the crippling financial effects of medical bills and a growing movement to decouple healthcare costs from creditworthiness.
For years, medical debt has been a significant contributor to negative credit reports, even for those with health insurance.An estimated 15 million americans could benefit from rules preventing this practice. Earlier this year, trade groups representing credit reporting agencies and debt collectors filed suit challenging regulations issued by the Biden administration that would have nationally removed medical debt under a certain threshold from credit reports. the administration argued these regulations exceeded its authority.
In a significant shift, the Trump administration chose not to defend the Biden-era regulations, leading a federal judge in Texas – appointed by President Trump – to rule they should be scrapped. As an inevitable result, the nationwide protections never took effect.
This federal inaction is now colliding with a wave of state-level initiatives. Maine recently enacted a law barring medical debts from credit reports, a move the Consumer Data Industry Association (CDIA) – representing credit bureaus – argues should be handled at the federal level.
“Only national, uniform standards can achieve the dual goals of protecting consumers and maintaining accurate credit reports,” warned zachary Taylor, the CDIA’s government relations director, to maine lawmakers earlier this year.
The reversal in federal policy is notably concerning given projections that millions of Americans are expected to lose health coverage in the coming years due to recent tax and spending legislation. This loss of coverage could exacerbate the problem of medical debt and its impact on credit scores.
“Millions of Americans are avoiding medical care, putting off needed surgeries, skipping essential treatments,” said Allison Sesso, president and chief executive of Undue Medical Debt, a nonprofit focused on debt relief and patient advocacy. “This isn’t just a health care issue,” she added, “It’s an economic crisis that’s keeping families from building wealth and fully participating in the economy. When credit scores are dinged by medical bills, everyone loses.”
The current legal battle highlights a growing tension between federal and state efforts to address the issue of medical debt and its impact on financial well-being. While states move to offer protections for their residents, the Trump administration’s opposition signals a potential roadblock to broader, nationwide relief.
(This article is based on reporting from KFF Health News and is republished under a Creative Commons Attribution-NoDerivatives 4.0 international License.)
