Just as Americans are about to face unprecedented sticker shock as a result of Republican efforts to gut their ability to pay for health care coverage, the Trump administration took action this week to make their financial situation even worse.
Thanks to our pitiless for-profit, private health care system, we live in a country where millions of Americans — unlike much of the rest of the developed world — are literally one unforeseen medical emergency away from financial ruin. But for those millions who incur medical bills that are simply beyond their capacity to pay off immediately, another potentially more long-term and just as devastating consequence is the accumulation of unsustainable medical debt.
As a hedge against unexpected disease, injuries and other health-related calamities, most Americans participate in some type of health insurance program, either through their employers or purchased on the open market. Because of this Republican-controlled Congress, however, many Americans in less than two months will be facing grotesquely inflated premiums to cover the cost of that insurance. That is because the enhanced premium tax credits which allow those Americans to purchase health insurance are scheduled to expire. Those enhanced credits were extended by the Biden administration through 2025. If Biden (or Kamala Harris) were in office and Democrats were in power, those credits would have been renewed. But Republicans have decided to allow those credits to vanish.
The reason those credits are expiring is to help pay for Republicans’ enormous, outsize tax cuts to the wealthiest citizens and corporations in this nation. Republicans’ refusal to renew these credits, and Democrats’ insistence that they still be made, is the biggest reason that the U.S. government has been shut down during the past few weeks.
Expiration of these credits will severely impact millions of Americans, regardless of their political affiliation. In many cases, the cost of purchasing health insurance on the open market is expected to double, and possibly triple. Although the credits to employers do not expire, the overall effect will be to raise the cost of premiums for everyone, employed, self-employed, or unemployed.
The ultimate consequence of such price increases will be that, according to some estimates, nearly five million Americans will lose their health insurance. Others will be forced into woefully underinsured "plans." That is, when they and their families are forced to go the hospital, or see a medical specialist for some condition, they will be unable to pay all or most of the staggering bills required for their care.
But they will still be billed, and those unpaid bills will go straight to collection agencies. As a result, millions are likely to suffer serious financial hardship, and at worst, bankruptcy. Last year nearly 100 million Americans — including those with “quality” employer-sponsored health care plans — carried some type of medical care debt. About 14 million of those --based on latest available figures from 2021 --carried medical debt exceeding $1000, and 3 million Americans carry over $10,000 in such debt. In less than two months, if those enhanced tax credits are allowed to expire, those numbers are going to get a whole lot worse.
But carrying medical debt affects more than just a person’s individual financial situation. It affects one’s ability to obtain a loan, rent an apartment, and even in some cases get a job. That’s because credit agencies can and will view “medical debt” through the same lens as they assess any type of debt: it’s a black mark on your credit rating. And those with a poor rating (or “score”) are charged substantially higher interest rates, if they can get credit at all.
The Biden administration understood that medical debt should not be viewed this way. It’s not a function of one’s spending habits, but an unavoidable consequence of being unlucky enough to need medical treatment for something, often something very serious. Accordingly, the Biden administration through the Consumer Financial Protection Bureau (CFPB) promulgated a federal rule, finalized in 2025, eliminating medical debt from consideration by credit bureaus.
But the incoming Trump administration immediately set out to invalidate that rule. As reported by CBS News, one of his first acts was to freeze its implementation.
In February, President Trump appointed White House Office of Management and Budget Director Russ Vought as acting director of the CFPB. Days after his appointment, Vought issued a memo to CFPB staff that directed employees not to issue any proposed or formal rules, stop pending investigations and not open new investigations, among other actions.
Trump and Vought then shopped around and found a receptive embrace in the form of a Trump-appointed, Federalist society Texas District Judge, who ruled in July that the CFPB had exceeded its authority in promulgating that rule in the first place. As a result, medical debt could still be considered by credit companies in determining one’s “creditworthiness.”
However, in the interim fifteen states — such as Colorado and New York — had passed their own legislation barring or restricting credit conglomerates from considering medical debt. That was because— in addition to passing the original rule — the CFPB under the Biden administration had provided guidance indicating that states could decide the issue for themselves, since they presumably had responsibility for the financial well-being of their own citizens.
This did apparently sit well not sit with Trump, or his zealous Project 2025 hatchet man, Vought. Yesterday as reported by Ann Carrns of the New York Times: the Consumer Financial Protection Bureau (as it is being bastardized by the Trump administration), reversed that guidance:
On Tuesday, the Consumer Financial Protection Bureau published guidance saying Biden-era guidance was “wrong” in concluding that states can regulate the use of information like medical debt in credit reports.
The consumer bureau’s guidance, formally known as an interpretive rule, “does not have the force or effect of law,” the bureau noted.
According to the Times’ report, “The notice in the Federal Register was signed by Russell T. Vought, the White House budget director, who is also serving as the bureau’s acting head.”
So this has nothing to do with some high-minded restraint on a Biden federal agency supposedly “exceeding its authority,” and everything to do with satisfying the demands of the credit industry, at the expense of all Americans.
The Trump administration is now not only actively encouraging insufferable price hikes on Americans who need health insurance. It’s actively taking steps to make the lives of all those hit by crippling medical bills immeasurably harder, by allowing credit companies to downgrade their financial futures, simply because they “chose” to get sick.
You better believe elections have consequences.
