Medical or dental bills that patients cannot afford to pay have left millions of Americans financially vulnerable and facing more than $220 billion in medical debt. While the uninsured are most at risk, many patients with insurance increasingly find they are unable to afford their cost-sharing responsibilities. Recent federal policy changes, including the expiration of Affordable Care Act enhanced premium tax credits and cuts to Medicaid and marketplace funding, will only exacerbate this problem in 2026.
Unfortunately, federal efforts to protect people from crippling medical debt have stalled. This means that now more than ever states have the lead role in mitigating these harms.
Federal Momentum on Medical Debt Goes Into Reverse, Just as Risks Are Rising
In recent years, the federal government, led primarily by the Consumer Financial Protection Bureau (CFPB), began working on efforts to mitigate the impacts of medical debt. In 2024, the CFPB finalized a rule that would have removed medical debt from many credit reports. It also led a cross-agency initiative to assess the impact of medical credit cards and other high-cost specialty financial products on patients. Under the prior administration, the Internal Revenue Service launched an audit of 35 nonprofit hospitals on their “community benefit” spending (i.e., financial assistance and other community investments nonprofit hospitals are required to provide in exchange for their tax-exempt status).
In 2025, the federal government changed course. First, the administration significantly reduced resources and staff at the CFPB. Second, when CFPB’s credit-reporting rule was challenged in federal court, CFPB asked the court to set aside its own rule, and the court agreed. Third, CFPB reversed previously issued guidance, which had supported states’ ability to ban the inclusion of medical debt in credit reports. This administration also has not followed up on the previous administration’s interest in regulating high-cost medical financing products or the adequacy of hospital community-benefit spending.
States Continue to Push for Protections Against Medical Debt
In 2025, states enacted a wide range of protections against medical debt.
- Bolstering financial assistance requirements. A handful of states enacted laws that will prevent patients from finding themselves in debt in the first place. Maine now requires hospitals to provide free care to patients below 200 percent of the federal poverty level. Prior to this, only those with incomes below 150 percent of poverty were eligible for free care. Vermont and Maryland enacted legislation specifying by what percentage the hospitals must discount certain patients’ hospital bills.
- Making medical bills easier to pay. Most state legislative activity in 2025 focused on protections for people who have already incurred medical bills they cannot pay. Maine now requires hospitals to offer reasonable payment plans limiting monthly payments to 4 percent of patients’ income for all patients with incomes below 400 percent of poverty. Maryland, Rhode Island, and Virginia acted to limit the interest rates that can be charged on unpaid medical bills.
- Protecting patients’ credit. In 2025, six states (Delaware, Maine, Maryland, Oregon, Vermont, Washington) enacted laws restricting the inclusion of medical debt in consumers’ credit reports. Two other states (Nevada and Texas) only allow hospitals to report to credit reporting agencies once they have fulfilled certain conditions (e.g., complying with price transparency laws in Nevada and providing an advance estimate of billed charges in Texas). In total, 16 states prohibit or restrict the inclusion of medical debt on credit reports, a consumer protection that now faces legal headwinds thanks to CFPB’s recent change in policy.
- Protecting patients in the courtroom. Maryland enacted legislation prohibiting lawsuits over medical bills that are $500 or less. Virginia and Rhode Island have banned some of the legal debt collection tools that were catastrophic to patients’ lives — liens and foreclosures on their primary homes as well as wage garnishment.
Legislators in Delaware, Illinois, Rhode Island, and Vermont have additionally appropriated significant amounts of money to buy and relieve residents’ existing medical debt.
Looking Forward
In 2026, the pressures that generate medical debt are likely to intensify as enhanced Affordable Care Act premium tax credits expire and funding for Medicaid and the marketplaces is reduced, and with the federal government retreating from earlier efforts to establish consumer protections. The responsibility for protecting patients rests with states. Recent state-level reforms to expand financial assistance, cap interest, rein in lawsuits and harsh remedies, and fund debt relief have made a meaningful difference, but they mostly operate after a bill has already turned into debt. The next phase of state policy must focus on prevention, with stronger standards for free and discounted care for underinsured and uninsured patients and lowering barriers to financial assistance. At the same time, states will need to back these rules with enforcement and data so that protections on paper translate into less debt in people’s lives.
