State Legislators Widen Focus on Medical Debt

On Jan. 7, 2025, two weeks before Donald Trump was inaugurated, the Consumer Financial Protection Bureau under the Biden administration issued a new rule barring credit reporting agencies from reporting medical debt and prohibiting creditors from considering medical debt when making credit eligibility decisions.

Industry trade groups challenged the rule, arguing that the CFPB had exceeded its authority. After the Trump administration took office, the CFPB joined with the industry groups in asking the court to vacate the rule. On July 11, a federal judge for the Eastern District of Texas granted their request.

States Lead Way on Medical Debt Reform

Since then, the fight over medical debt has shifted back to the states, where legislators have broadened their focus from credit reports, which we covered a couple of years ago, to wage garnishment.

Lawmakers in at least eight states have considered legislation this year to ban or limit creditors from garnishing wages to pay medical debts, a practice that had been entirely banned in only six states—Delaware, New York, North Carolina, Pennsylvania, Texas and Virginia—according to a July 2025 report by the Commonwealth Fund. Rhode Island enacted a bill (SB 169) barring wage garnishment for judgments based on medical debt in June 2025, bringing the number of states with such bans to seven.

Maine joined those ranks in early April when Gov. Janet Mills (D) signed LD 2129 by Sen. Donna Bailey (D) to ban medical debt collectors from placing liens on debtor’s homes or garnishing wages.

“No one should lose their home or their paycheck because they got sick,” Mills said in a press release announcing the bill signing. “We need to do much more to bring down the cost of health care in this country. But in Maine, we’re not waiting for the Federal government to act. We are taking action to protect Maine people and to make sure that illness or accident never costs someone their home or their livelihood.”

Similar proposals are still pending in Michigan (SB 702) and Ohio (HB 257), while a measure in Hawaii (SB 2165) appears to be stalled, not having moved since being referred to committee at the end of January. Bills in Colorado (HB 1267), Florida (HB 1489), Indiana (SB 85) and Washington (SB 6105), meanwhile, are either officially or effectively dead for the session, with Colorado’s having been postponed indefinitely, Florida’s having died in subcommittee and the Indiana and Washington measures having failed to advance before adjournment.

Scott Purcell, chief executive of ACA International, an association of credit and collection professionals, has argued that such measures are unnecessary.

“The wage garnishment process is already highly regulated at the federal and state level and includes many consumer protection measures,” he said, according to a report by KFF Health News.

Bridget Frazier, a spokesperson for the Colorado Hospital Association, said the day after HB 1267 was introduced that it “could drive up costs and financial risk for health care providers, making it harder to keep hospitals sustainable and ensuring Coloradans have access to care when they need it most.”

But the garnishment legislation reflects the reality that under the second Trump presidency, states “now more than ever” have taken “the lead role” in shielding residents from “crippling medical debt,” according to a trio of Georgetown University researchers who wrote earlier this year for the Commonwealth Fund, a private foundation that advocates for an equitable healthcare system.

“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,” they wrote. “The responsibility for protecting patients rests with states.”

Medical Debt Considered in Nearly Half of States

At least 24 states have considered bills referring to medical debt this year, according to the LexisNexis State Net legislative tracking system. Measures in 11 of those states deal with wage garnishment, two of which have been enacted.

Many Medical Debt Bills Considered This Session

In March, the Michigan Senate passed a package of five bills championed by Sens. Sarah Anthony (D) and Jonathan Lindsey (R) to combat medical debt in the Great Lakes State. All of the measures were introduced in 2025.

SB 449 and SB 450 would create state hospital financial-assistance requirements and reporting obligations. SB 451 would prohibit credit reporting agencies from including medical debt on credit reports. SB 701 and SB 702 would prohibit healthcare providers and medical debt holders from charging more than 3% interest or late fees on medical debt; prohibit the use of liens or foreclosures to collect medical debt; prohibit wage garnishment for individuals who qualify for financial assistance; and prohibit the deferral, denial or requirement of payment before providing emergency services to individuals with medical debt.

Taken together, the measures indicate that state lawmakers are still focusing on credit reports and other concerns, in addition to wage garnishment.

“The Senate passing these bills marks a significant first step in delivering real relief for our state’s medical debt crisis,” Lindsey said in a press release. “Right now, too many Michiganders are burdened by medical debt with limited opportunities to escape it. Senator Anthony has been a leader on this issue, and our partnership on these legislative packages will ensure transparency in charity care and strengthen our state’s laws on medical debt.”

Anthony added: “When medical debt can follow someone around for the rest of their life—hurting their ability to buy a home, forcing them to forgo essential expenses like food and rent, and keeping them from getting back on their feet—we know the system is broken.”

Since the beginning of the year, at least 148 bills referring to medical debt have been considered in 24 states, according to the LexisNexis® State Net® legislative tracking system. Seventeen of those bills deal with wage garnishment.

The legislative attention comes as many Americans struggle with healthcare costs. According to a summary of recent KFF polling, nearly half of U.S. adults say it’s challenging to afford medical care and about three in 10 say they or someone in their household had trouble paying for health care in the past year.

With federal medical-debt protections stalled and health care costs continuing to strain household budgets, state lawmakers appear likely to remain the primary source of new consumer safeguards. Whether those efforts center on wage garnishment, credit reporting or hospital financial-assistance requirements, the next phase of the medical-debt debate is likely to be shaped less in Washington than in state capitols.

—By SNCJ Correspondent BRIAN JOSEPH

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