Lawmakers in multiple states are pursuing new measures to shield patients from the impact of medical debt, despite recent federal actions limiting state authority over credit reporting.
In Alaska and Michigan, legislators are moving forward with bills designed to keep medical debt off consumer credit reports. This comes after the Trump administration reversed previous federal support for such protections and stated that states do not have the power to regulate consumer credit reports.
California and Colorado attorneys general have committed to upholding their states’ existing credit reporting laws related to medical debt. Colorado is currently facing a lawsuit from debt collectors challenging its 2023 law, which requires some or all medical debt be removed from credit reports.
Indiana and Ohio lawmakers have dropped efforts to remove medical debt from credit reports but are advancing other patient protections. These include capping interest rates on medical debts, limiting wage garnishment, and preventing people from losing their homes due to unpaid medical bills.
"Seventy-four percent of Alaska voters don’t think credit reports should include medical debt," said state Rep. Genevieve Mina, who is sponsoring a bill in Alaska. "I’m not going to wait on the courts on the medical debt issue."
An estimated 100 million Americans carry health care-related debt. Both Republican- and Democratic-led states have passed laws aiming to protect consumers.
Federal policy shifted this year when President Donald Trump's administration decided not to defend regulations that would have excluded all Americans' medical debt from credit scores. In October, the Consumer Financial Protection Bureau (CFPB), now led by Russell Vought, stated that states lack authority over consumer credit reporting.
"It's sort of a head-spinning, 180-degree reversal," said Chi Chi Wu of the National Consumer Law Center. She referred to the CFPB under its current leadership as "the 'evil twin' of its predecessor under President Joe Biden."
The CFPB did not respond to requests for comment.
Shortly after new federal guidance was issued, ACA International—a trade group representing debt collectors—filed suit against Colorado’s law. Scott Purcell, CEO of ACA International, argued that removing medical debts makes it harder for creditors to assess risk: "His organization's case also argues the Colorado law violates the First Amendment by suppressing 'truthful commercial speech.'"
Colorado Attorney General Phil Weiser called the lawsuit outrageous in a statement: His office "will strongly oppose all efforts to strip away critical medical debt protections."
California Attorney General Rob Bonta also pledged support for his state's law regardless of federal interpretation: "Let me be clear: This remains the law in California."
Some state legislators are changing strategies in response to lawsuits and federal policy changes by modifying or dropping proposals targeting credit reporting directly. Instead, they are looking at other ways to limit how medical debts affect consumers’ lives—for example, restricting landlords or employers from using this information in decisions or requiring providers and collectors not report such debts.
"You’ll often hear providers say, 'Oh, well, we don’t want to hurt our patients' credit,'" Wu said. "Tell the debt collectors, 'Don’t report this.'"
Alaska's proposed legislation includes both barring landlords from considering tenants’ medical debts and prohibiting providers or collectors from informing agencies about patient bills.
In Indiana and Ohio, lawmakers made tactical decisions not to pursue direct changes on credit reporting this session after past failures. Indiana State Sen. Fady Qaddoura explained: "It’s out of legislative pragmatism...We want to be sure that you don’t get a piece of legislation killed with many benefits...just because one provision can’t go in." Ohio Rep. Michele Grim echoed this approach: "It's better to pass something than nothing at all...It still bans wage garnishment...And it caps the interest rate."
A recent investigation found thousands of Coloradans each year face wage garnishment due to unpaid hospital bills; sometimes these court cases target people who do not actually owe money.
While efforts are often bipartisan, passing such legislation remains difficult—especially following recent changes at CFPB—and similar proposals failed earlier this year in Wyoming and South Dakota.
Since 2023 major U.S. credit bureaus TransUnion, Equifax, and Experian voluntarily stopped including individual medical debts under $500 on consumer reports—a practice confirmed by their industry association—but larger debts may still appear unless further action is taken.
Lawmakers continue debating whether additional steps are needed at state level regarding larger amounts owed for health care services.
"We know that this will need to get beefed up," said Michigan State Sen. Sarah Anthony about pending legislation she co-sponsors; advocates hope new measures will follow strategies like those outlined by Wu.
"These aren't debts that people choose to take on...People don't choose to have emergency heart bypass surgery," said Libby Benton of Michigan Poverty Law Program.
Yet both can end up affecting an individual's credit report.
