With Musk & Trump targeting CFPB, medical debt consumer protections fall to state, legislators say

“Who knows if there is even going to be a CFPB by June,” said Assemblyman Max Carter. (Photo: Richard Bednarski/Nevada Current)

People shouldn’t be “pushed into ruin” if they get sick and are unable to pay medical debt, says Democratic Assemblymember Max Carter. 

Carter has introduced legislation to prohibit health care providers and collection agencies from reporting medical debt to consumer reporting agencies.

The Consumer Financial Protection Bureau (CFPB) announced during the Biden administration a regulation to prevent medical debt from being included on credit reports. It was supposed to take effect March 17.

However, it is uncertain if those regulations will remain intact under President Donald Trump. 

The CFPB has been targeted by Elon Musk’s so-called DOGE, and Trump this month ordered the CFPB, which finalized the rule on medical debt, to stop working in efforts to disable the agency. 

A Texas judge issued a 90-day stay on the rule that prohibits medical debt from being included on consumer reports, delaying the effective date from March to June 15. 

“Who knows if there is even going to be a CFPB by June,” Carter said during a press call Wednesday. 

Assembly Bill 204, which is being pushed by Carter and was heard Monday by the Assembly Committee on Commerce and Labor, would prevent collection agencies from threatening to arrest people for debt, obtain a lien against a primary residence, seek to foreclose on home, or garnish wages.

Under the proposed legislation, health care providers aren’t allowed to engage in “any extraordinary collection action until 180 days after the first bill” has been sent to the consumer. 

“These are common sense solutions that help patients pay back their debt while still allowing hospitals and doctors to collect payments,” Carter said during the committee hearing. 

Adam Zarrin, director of state government affairs for the Leukemia & Lymphoma Society, and Peter Aldous, a staff attorney with the Legal Aid Center of Southern Nevada, presented the bill to the committee alongside Carter. 

If passed, the bill wouldn’t take effect until October and would only apply to debt incurred afterward. 

Carter, along with the Leukemia & Lymphoma Society, held a press conference Wednesday to discuss the legislation. 

They released results from a survey on medical debt in Nevada conducted by the nonpartisan research firm PerryUndem and said medical debt is a nonpartisan issue burdening Nevadans across the state. 

The survey of 823 registered voters interviewed in November found that more than four in 10 had delayed or foregone care because of debt, while six in 10 are concerned they could go into medical debt. Another 14% of those surveyed said they filed for bankruptcy because of medical debt. 

The survey didn’t ask people the average cost of their medical debt. 

Zarrin said a 2023 survey from the Urban Institute estimated “7% of Nevadans have debt that’s in collection and the medium amount is about $1,800.”

“That is just the medical debt that has been sent to collections,” he added. “That doesn’t count debt that’s on a payment plan or still owed to a provider. I think there is still a large amount out there that we cannot quantify.”

‘This couldn’t be more timely’

Between the rising costs of health care along with “a highly consolidated health care system,” the likelihood of medical debt is growing, Zarrin told state lawmakers Monday. 

Even people able to purchase insurance, including those who purchase plans on the Silver State Health Care Exchange, are sometimes met with high deductibles and out of pocket expenses, he said. 

Medical care can be even more costly for people with chronic illnesses, like cancer. In the first year of being diagnosed with leukemia, Zarrin said the average “cost for treatment will be half a million dollars.” 

“When cancer patients face that, four out of 10 will not start treatment all together,” he said.  “Others will take on debt and feel trapped by medical debt. It has an impact on their health. They will skip or delay treatment. They might also change the foods they eat. It begins to impact their mental health as they begin to believe they will never be able to pay off this debt.” 

During Wednesday’s press call, Carter said he dealt with the issue on a personal level “after my wife passed away in a traumatic accident in 2017.”

“As you can imagine, time in the trauma center bills built up,” he said. “In 2022, I needed to get a mortgage on my house. I got clear into escrow and all of a sudden a handful of bills from when she died popped up.”

While knocking on doors during the last election cycle, Carter said he heard from constituents dealing with similar issues regarding the rising costs of healthcare and fears of medical debt. 

“We want to ensure no one is forced into financial ruin simply because they got sick,” he said. 

Several people testifying in support Monday also recounted issues and fear around medical debt. 

Maria Navarrete, a health equity organizer with Make the Road Nevada who supports the bill, said people are already struggling with the high cost of living. Medical debt, she said, was a “leading cause of financial hardship, often forcing families into poverty.”

“Reporting medical debt to credit agencies can ruin a person’s credit score, making it difficult to rent a home, buy a car, or even get a job,” Navarrete said.

Make the Road Nevada, the Progressive Leadership Alliance of Nevada and Professional Fire Fighters of Nevada were among groups who supported the bill. 

The need for states to address the medical debt is more urgent given the Trump administration’s effort to dismantle the CFPB and stymie the federal agency’s effort to provide some protections to consumers, said Democratic Assemblymember Sandra Jauregui. 

“One of the federal agencies that protects consumers for medical debt is no longer there to protect them,” she said. “This couldn’t be more timely.”

Republican Assemblymember Lisa Cole said she was concerned about how the bill would impact the medical providers. 

“My concern is going to be if they feel they can’t collect on their debt and there is a real cost incurred to them that they won’t practice here so we will have fewer doctors.” 

The bill also authorizes the state attorney general to take legal action against “a person who has violated or is about to violate” the provisions of the bill. 

“The attorney general has the ability to do thought-policing, basically,” Cole said. 

Groups including Nevada Hospital Association, the Nevada Rural Hospital Partners and the Nevada State Medical Association were among medical groups opposed to the bill. 

“If health care providers can’t pursue effective debt recovery efforts, why would anybody pay their medical bills,” said Patrick Kelly, a lobbyist with the Nevada Hospital Association. “This bill applies to everyone. Millionaires can simply ignore their medical bills without any real consequences and shift their costs to honest people who pay their bills. How’s that fair?”

Kelly said hospitals already offer financial hardship programs and work on payment arrangements for low-income populations. 

Other groups opposed to the bill include Creditors Rights Attorneys of Nevada and Consumer Data Industry Association also opposed the bill.

The committee took no action on the bill. 

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