Medical Debt
Medical debt is a big burden for the middle class.
Debt crisis
Medical debt is the most common debt in collections. There are more medical bills in collections on Americans' credit reports than unpaid credit cards, personal loans, utilities and phone bills combined.
The Biden administration had the Consumer Financial Protection Bureau (CFPB) develop rules to bar unpaid medical bills from affecting patients' credit scores.
In January 2025, the CFPB finalized the rule to completely ban medical debt from consumer credit reports. It was set to take effect later that year.
Republicans had been attacking the CFPB, and conservatives on the Supreme Court have been chipping away at federal regulatory powers.
Hospitals and collection agencies immediately came out against the rule. Threatening people's credit scores is the number one method to get them to pay.
Overinflated hospital costs, which lead to most of this outstanding debt, weren't being discussed.
Industry groups and credit reporting agencies sued to block the rule. After the change in administration, the CFPB itself sided with the industry groups.
On July 11, 2025, the U.S. District Court for the Eastern District of Texas officially vacated the rule. The nationwide ban never went into effect.
• Healthcare-related debt includes more than just unpaid or past-due bills from providers.
Many people carry debt from medical and dental bills they've paid off by taking on other forms of debt, including credit cards, personal bank loans, or loans from family and friends.
• In 2022, the Consumer Financial Protection Bureau (CFPB) estimated that $88 billion in medical debt was reflected on Americans' credit reports.
The total amount of medical debt is likely higher, because not all medical debt is visible to credit reporting companies.
• An analysis of 2020 Census Bureau data found 17% of households owed medical debt in 2019.
A 2022 Kaiser Family Foundation (KFF) survey found that four in ten adults have some form of healthcare debt.
♦ Uninsured adults, women, Black and Hispanic adults, parents, and those with lower incomes are especially likely to say they have healthcare-related debt.
• About a third of adults with healthcare debt owe less than $1,000.
30% of the people surveyed by KFF said they wouldn't be able to pay an unexpected $500 medical bill without borrowing money.
30% expect they'll be able to pay off their medical debt within a year, but 20% say they don't think they'll ever be able to pay it off.
Adults with healthcare debt report making sacrifices to pay it down. Most report cutting back on household spending, and more than four in ten say they or a household member have used up all or most of their savings because of their healthcare debt.
Many also report more serious consequences, like skipping payments on other bills, delaying college or buying a home, or changing their housing situation because of their debt.
• Other consequences of debt, like being contacted by debt collectors and having their credit scores hurt, can lead to more financial problems, such as difficulty buying a vehicle needed for work, or buying or renting a home.
Some relief from debt collectors
Congress, federal agencies and others have taken some small steps to respond to medical debt.
Congress passed the No Surprises Act to help protect Americans from certain unexpected medical bills, including surprise bills for emergency services from out-of-network providers.
♦ In 2022, the three major credit bureaus, Equifax, Experian and TransUnion, announced changes. Paid medical debt no longer appears on credit reports. New medical debt can't be reported for one year. And since April 2023, medical collections of $500 or less no longer appear.
• Understand that while credit bureaus may not report debt under $500, hospitals and other healthcare providers can still try to collect it.
While the CFPB federal ban failed, 15 states and Washington, D.C. have passed their own laws keeping medical debt off credit reports, including California, New York and Colorado. But most people with medical debt live in states without that protection.
♦ Even those state laws are under attack. The Trump administration's CFPB now claims federal law blocks states from keeping medical debt off credit reports, and industry groups are challenging the state laws in court.
Policy intervention
A majority of Americans say they support the government setting limits on how much patients with health insurance can be asked to pay out of pocket for medical care.
• Government regulation of health care is generally less popular among Republicans than Democrats.
♦ Health insurance deductibles are patients' biggest struggle. But the government has actually encouraged high deductibles.
The Affordable Care Act allowed insurers to set deductibles much higher than those typically faced by Americans who get health insurance at work. This was done to keep the cost of the program down.
As a result, plans sold through HealthCare.gov have some very high deductibles and out-of-pocket limits.
♦ It got harder in 2026. The extra premium help that started in 2021 expired at the end of 2025. Many people saw what they pay for the same plan more than double, and millions dropped coverage. Congress fought over extending it, but no extension passed.
With higher premiums, more people are being pushed into bronze plans with the highest deductibles. That means more medical debt down the road.
• In 2026, average Marketplace deductibles hit a record high, and the legal out-of-pocket ceiling is $10,600 for an individual and $21,200 for a family.
• Looking ahead to 2027, the out-of-pocket ceiling jumps 13.2%, to $12,000 for an individual and $24,000 for a family. Some bronze plans will be allowed to go as high as $15,600 for one person.
There's a lot of public support for some form of government action to bring down deductibles and out-of-pocket limits. But no one wants to address the trade-offs of doing it.
