Using the CRA to Undo the Medical Debt Rule Would Make an Existential Crisis Far Worse

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Mona Shah, JD, MPH, is the Senior Director of Policy and Strategy and a member of the senior management team at Community Catalyst.

No one should have to choose between getting essential medical care and financial ruin. Yet for the more than 100 million people who have medical debt, that is an undeniable reality. We have a medical debt crisis in this country, and policymakers in Washington are not doing enough to address it. 

In fact, some in Congress are acting to make it worse, threatening to exacerbate the crisis by repealing, via the Congressional Review Act, a major step that the Consumer Financial Protection Bureau (CFPB) took to bring relief to those impacted by medical debt. 

In January, the CFPB finalized a new rule that bans credit rating agencies from including any amount of medical debt on most consumer credit reports. The new rule, which was slated to go into effect in March, prohibits lenders from considering medical debt when assessing the creditworthiness of borrowers. We already know that medical debt is a poor predictor of creditworthiness and does not belong on credit reports. But the Trump administration has put a hold on the rule and now some in Congress are threatening to repeal it all together. 

Penalizing People Unfairly

The truth is that no one plans on taking on medical debt. We are all only one emergency visit away from being saddled with thousands of dollars of medical bills. And medical debt is not predictive of a person’s ability to pay back loans. The majority of medical bills are from one-time or short-term medical expenses, such as hospital stays or accidents and are often riddled with errors. 

Medical debt is unpredictable—no one chooses to get hurt or sick. Significantly, individuals who have just given birth hold more medical debt and 47% of cancer patients and survivors reported medical debt related to their cancer, and nearly half of those with medical debt saw their credit score decrease. The American Medical Association, who supports this rule, understands that people who are worried about the impact medical bills could have on their credit scores will delay or skip necessary care.

This is why the CFPB rule is so vital. It is literally a lifeline for millions. For some, it’s the difference between making ends meet and losing everything. Efforts to repeal it are a direct attack on people struggling with the rising cost of health care. 

And let’s be clear, this is not some abstract policy debate. Repealing this rule will have devastating impacts on millions. Samuel in Ohio was billed $25,000 for emergency surgery due to a hospital error. Though the bill should have been $6,000, no one discussed payment assistance options with him. Unable to keep up, his debt was placed in collections, tanking his credit score. 

Samuel is not alone. Stories like his are far too common.

According to a 2024 report from The Commonwealth Fund, 40% of people with medical debt drained their savings to pay bills. And more than a third saw their credit score drop due to medical debt. One in three were forced to skip food, rent, or other necessities in order to pay off medical bills.

Harming the Economy

When medical debt lowers your credit score, it can prevent you from getting a loan to buy a house, a car, or to start a new business. Indeed, the CFPB’s prohibition on including medical debt in consumer reports would allow consumers to take out approximately 22,000 new affordable mortgages each year. That’s 22,000 more households free to achieve the American dream of homeownership because something that shouldn’t be on their credit report isn’t on their credit report.

And the Small Business Majority, a group that advocates for tens of millions of small businesses, has stated that removing medical debt from credit determinations will “reduce barriers for new and existing entrepreneurs to fill their credit needs.”

Voters Support Consumers, not Collectors

That is why the CFPB medical debt rule would be a gamechanger. Yet some in Congress are trying to block it—just to protect debt collectors’ profits. And protecting debt collector profits over helping people secure the health care they need and giving them economic stability is cruel, unconscionable and shameful. 

If they follow through with it, they will do so at their own political peril. Polling by HIT Strategies found that 75% of voters—including majorities across party lines support removing medical debt from credit scores. And that medical debt is seen as a top cost-of-living issue across party lines.

Medical debt isn’t a personal failure—it’s a policy failure. And using the CRA to repeal one of the few policies that could bring relief to people dealing with the medical debt crisis will take an existing crisis and make it far worse.

The opinions shared in this article are the author’s own and do not reflect the views of any organization they are affiliated with.

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