By Stacy M. Brown
Black Press USA Senior National Correspondent
A Trump-appointed federal judge has blocked a key rule that would have removed medical debt from the credit reports of roughly 15 million Americans, dealing a harsh blow to struggling families already burdened by the high cost of health care, particularly Black Americans who carry a disproportionate share of that debt. The ruling by Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas vacated the Consumer Financial Protection Bureau’s (CFPB) rule issued in January under the Biden administration. The judge sided with credit reporting industry groups, who argued that the CFPB had exceeded its authority under the Fair Credit Reporting Act. The decision halts a rule that had not yet taken effect and was designed to prevent medical debt, which is often the result of billing errors, insurance disputes, or unavoidable emergencies—from dragging down a person’s credit score. Julie Margetta Morgan, former CFPB official and now president of The Century Foundation, told CBS MoneyWatch that medical debt “doesn’t show whether [someone is] likely to pay their mortgage or other debts.” The court decision effectively slams the door to that reform.
According to the Peterson-KFF Health System Tracker, nearly 20 million adults in the U.S. owe medical debt, with a total estimated at $220 billion. Among them, 3 million people owe more than $10,000. That burden is not shared equally: 13% of Black Americans report having medical debt, compared to 8% of white Americans and 3% of Asian Americans. Medical debt also disproportionately affects women, people with disabilities, and those living in the South and rural areas. In addition, more than half of all collection items on credit reports are for medical bills, according to the CFPB. While private credit bureaus like Equifax, Experian, and TransUnion have taken limited steps—such as removing medical collections under $500—consumer advocates note these changes fall short of true relief, especially for low-income households and communities of color.
Medical debt has lasting effects: KFF polling shows people with such debt often cut back on food, clothing, and other essentials, drain savings, borrow from friends and family, or skip needed care entirely. For many, even those with health insurance, a serious illness or emergency can trigger financial ruin. The Biden administration’s now-blocked rule aimed to address this by recognizing that medical debt is not a reliable indicator of financial behavior and should not influence credit scores. But that rule was effectively frozen after Trump reinstalled Russ Vought—a fierce critic of the CFPB—as acting director in February. Vought promptly issued a directive halting new rules and investigations, leaving the agency in a state of paralysis. With 20% of Americans having at least one medical debt collection on their credit report, and with Black communities most likely to carry that debt, the ruling stands as a glaring example of policy decisions with racial and economic consequences. States like Colorado and New York have taken steps to protect consumers, but without federal backing, millions remain exposed. “There are a lot of flaws in our medical billing and reporting system, and it lands in the consumer’s lap,” Margetta Morgan stated.
