Medical debt reform has become a statehouse priority in 2025 after a federal court struck down a Biden-era CFPB rule that would have eliminated medical debt from credit reports. With federal action sidelined, states are stepping in, creating a patchwork of rules that collection operations must now navigate, according to a recently published report.
The big picture:
- The now-vacated CFPB rule would have removed $49 billion in medical debt from credit reports, raising scores for 15 million consumers.
- A Texas court invalidated the rule, finding the CFPB exceeded its authority and reaffirming that federal law allows medical debt on reports.
- The ruling also raised the possibility that federal law preempts state attempts to ban medical debt reporting, injecting uncertainty into state-level reforms.
By the numbers:
- In 2025, lawmakers in 38 states introduced more than 123 bills on medical debt.
- At least 30 bills cleared one chamber, and 14 became law in 10 states.
Where states are focused: Four main categories of reforms have emerged:
- Banning medical debt from being reported to credit bureaus (e.g., Delaware, Maine, Maryland, Oregon, Rhode Island, Vermont, Washington).
- Limiting interest rates that can be charged on medical debt (e.g., Maryland, Rhode Island, Virginia).
- Restricting when and how providers can collect debt (e.g., Maryland, New York, Nevada).
- Authorizing debt cancellation through state buyback programs (Maryland).
Zoom in: Maryland passed the most sweeping package in the country. It bans credit reporting of medical debt, blocks lawsuits on debts under $500, delays collections until 240 days after billing, and prohibits hospitals from charging interest without court approval. But its credit reporting ban could be challenged under federal preemption.
What’s next:
- Democratic-led states are expected to expand interest rate caps and debt collection restrictions.
- Republican-led states may tie collections to transparency, requiring itemized bills or hospital compliance with price disclosure laws.
- With federal preemption looming, states may shift from bans on reporting toward reforms that are less vulnerable in court, such as interest limits, transparency rules, and debt cancellation programs.
