On October 28, 2025, the Trump administration delivered a jolt to millions of Americans grappling with health care costs by moving to overrule state laws that shield credit reports from the impact of medical debt. The Consumer Financial Protection Bureau (CFPB), led by Russell Vought as acting head and White House budget director, issued an interpretative rule that reverses Biden-era policies and asserts federal preeminence in credit reporting standards under the Fair Credit Reporting Act (FCRA).
This new guidance, as reported by The Associated Press and Common Dreams, marks a sharp policy U-turn. Under President Biden, states had been empowered to enact their own protections—many barring medical debt from being factored into credit scores. Now, the CFPB's stance is clear: "Congress meant to occupy the field of consumer reporting and displace state laws," the bureau concluded in its interpretive rule, as signed by Vought.
The stakes are enormous. More than 100 million Americans carry some form of medical or dental debt, according to the Kaiser Family Foundation (KFF), with millions owing $10,000 or more. KFF also estimates that the nation’s total medical debt hovers around $220 billion. The burden is not spread evenly—states like South Dakota, Mississippi, West Virginia, and Georgia, all Republican-controlled, see roughly one in six residents with outstanding medical debt.
Previously, more than a dozen states, including New York, Delaware, Maryland, Virginia, and most of New England and the West Coast, had enacted laws to keep medical debt off credit reports. These local protections built on a 2023 move by the three major credit bureaus—Experian, Equifax, and TransUnion—to stop tracking medical debts below $500, a change that eliminated about 70% of all medical debts from consumer files. But some states chose to go further, barring any medical debts from being reported at all.
The Trump administration’s new rule, however, asserts that only the federal government can set such standards. The CFPB’s interpretive rule, as described by AP and Denver Post, repeals the Biden-era flexibility and leaves states powerless to enforce their own bans. Under the rule, state laws that attempt to block medical debt from appearing on credit reports are now considered invalid—at least according to the federal agency’s current interpretation.
The timing of the move has not gone unnoticed. It comes just as the Affordable Care Act (ACA) marketplace’s Open Enrollment period is about to begin and mere weeks before enhanced premium ACA tax credits—key subsidies that make health insurance affordable for millions—are set to expire. According to Democrats.org, if these credits lapse, premiums could rise by an average of 114% for 22 million Americans. The policy shift, critics argue, could force even more families into difficult decisions about whether to pay medical bills or cover basic needs like food and housing.
Reactions have been swift and sharp. Kendall Witmer, Rapid Response Director for the Democratic National Committee, lambasted the decision: "As if Donald Trump’s rampage to raise health care costs for 22 million Americans wasn’t enough, he’s now unnecessarily forcing medical debt on Americans’ credit reports just as health care costs are set to spike. Everyday Americans are already grappling with high costs on everything, including groceries, rent, and utilities, as well as a job market that’s getting worse by the day. An accidental injury or a trip to the doctor should not force everyday Americans deeper into financial hardship. Trump is backing millions of Americans into a corner and forcing them to decide whether they should pay their medical bills or put food on the table."
Patient advocates and nonprofit leaders warn that the new guidance may not just reverse progress but could have a chilling effect on future reforms. Lucy Culp, who oversees state lobbying efforts for Blood Cancer United, cautioned, "This rule will have a chilling effect on states’ willingness to pass these critical patient protections." Elisabeth Benjamin, vice president of the Community Service Society of New York, called the regulatory interpretation "crueler" than previous efforts, emphasizing the real-world consequences for families already struggling with health care costs.
The CFPB did not immediately respond to requests for comment, leaving many in the consumer advocacy world frustrated and anxious about next steps. Some experts predict a wave of litigation as states and consumer groups challenge the federal agency’s authority to override local laws. Trade groups representing credit bureaus and debt collectors have already been in court this year, challenging the Biden administration’s earlier attempts to remove medical debt from credit reports nationwide. Their argument? That only Congress—and by extension, federal agencies—can create uniform standards for credit reporting.
Zachary Taylor, government relations director for the Consumer Data Industry Association, made the industry’s case clear to lawmakers in Maine: "Only national, uniform standards can achieve the dual goals of protecting consumers and maintaining accurate credit reports." The CFPB’s new rule, by this logic, is a step toward such uniformity—though critics argue it’s the wrong kind, prioritizing creditors and debt collectors over vulnerable patients.
Medical debt is notoriously problematic on credit reports. Insurance delays, disputed charges, and the sheer complexity of the health care system mean that many Americans find themselves with unpaid bills through no fault of their own. Even minor debts can have outsized impacts, making it harder to secure a mortgage, qualify for a credit card, or finance a car. Allison Sesso, president and CEO of Undue Medical Debt, a nonprofit that buys and retires patient debt, put it bluntly: "This isn’t just a health care issue. 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."
While the new CFPB rule does not immediately erase existing state protections, it casts a long shadow over ongoing and future efforts to shield consumers. States weighing new legislation may now hesitate, wary of federal preemption and the threat of costly legal battles. For the estimated 15 million people who would have benefited from the Biden administration’s now-scuttled federal restrictions—never defended in court by the Trump administration—the path forward looks murkier than ever.
As the nation’s health care and credit systems collide once again, the debate over who should have the final say—states or Washington—remains unresolved. But for millions of Americans, the consequences are immediate and deeply personal, with the specter of medical debt now looming even larger over their financial futures.
