Trump Health Care Policy Cuts Expected to Increase Medical Debt

The Trump administration's health care policies and recent tax legislation are expected to increase medical debt among U.S. consumers by reducing federal protections and increasing out-of-pocket costs. The tax cuts signed in 2017 include significant reductions in Medicaid funding, potentially leading to millions losing health insurance coverage over the coming years, which in turn diminishes financial protections against high medical bills. Concurrently, state insurance marketplaces will see premium hikes, prompting some to either drop coverage or switch to plans with higher deductibles, increasing personal medical expenses.

Additional federal rule changes are also contributing to higher patient costs. New guidelines concerning COVID-19 vaccines may allow insurers to stop covering vaccine costs for many people, shifting the financial burden to individuals. Medicaid copayment increases for doctor visits and the roll-back of regulations preventing medical debt from affecting consumer credit reports exacerbate the situation, potentially impacting credit scores and borrowing capacity for those with unpaid medical bills.

The rollback of consumer credit protections incurs risks, with the Consumer Financial Protection Bureau's January 2023 rules to remove medical debt from credit reports being successfully challenged in court and subsequently discarded. This removal was expected to benefit millions by improving their credit health in the event of medical debt.

Studies have shown Medicaid expansion under the Affordable Care Act effectively reduced medical debt and improved credit scores in participating states. Analysts and consumer advocates caution that cuts to Medicaid funding and federal subsidies, alongside insurance premium increases, may reverse these gains, pushing more Americans into medical debt.

The Congressional Budget Office projects that more than 10 million people could become uninsured by 2034 due to these Medicaid funding cuts, underscoring how federal policy shifts may deteriorate financial security for vulnerable populations. Further, the potential expiration of federally funded subsidies on health insurance marketplaces could cause more Americans to face higher healthcare expenses.

Insurers, payers, and policymakers are likely to confront increased challenges in managing medical debt and coverage affordability. The health care industry's regulatory and economic environment is in flux, with implications for compliance, risk management, and consumer financial protection measures evolving concurrently.