Objective

To test if state consumer protection policies reduce the share of consumers with medical debt in collections on their credit reports.

Study Setting and Design

This study uses a quasi-experimental research design to estimate the impact of consumer protection laws implemented between 2020 and 2022 in Illinois, Maryland, New Mexico, and Oregon on the share of consumers with medical debt in collections. These laws primarily aim to protect consumers against medical debt by expanding access to hospital financial assistance. We use a synthetic control approach to estimate changes in medical debt following the implementation of policies in treatment states relative to changes in select control states. We also assess the effects of earlier policies implemented between 2013 and 2019 in Washington, Utah, and North Carolina.

Data Sources and Analytic Sample

This analysis relies on two extracts of credit bureau data from one of the country's three main credit bureau agencies. The first extract consists of random samples from June 2017 to June 2024 of approximately 125,000 consumers in each treatment state and 500,000 residents from the pool of 14 selected comparison states in each year. The second extract is based on a 2%–4% random sample of consumers in each year from 2011 to 2022.

Principal Findings

We did not observe a statistically significant reduction in medical debt associated with policies implemented in these states within the study timeframe. In most states in our primary analysis, point estimates of the treatment effects are near zero, and in nearly all state-years, we can only rule out declines in medical debt larger than 1–3 percentage points following policy implementation.

Conclusions

Though we did not detect statistically significant effects of recent consumer protection policies on medical debt in collections, additional research is needed on whether these policies benefited consumers in ways that are not measured in this analysis and whether states that continue to move forward with similar laws can improve their effectiveness by extending consumer protections to a wider group of patients and providers and addressing implementation and enforcement challenges.