The Connection Between Medical Debt And Housing Instability

A study examines the link between health care debt and the risk of losing one’s home, though the data leaves room for nuance regarding cause and effect.

The relationship between medical debt and financial insolvency has long been a focal point for regulators and consumer advocates. A new study published in JAMA Network Open and reported on by The American Journal of Managed Care (AJMC) suggests that medical debt is a significant predictor of housing instability, including evictions and foreclosures.

According to the report, “individuals with medical debt were more likely to report housing instability than those without such debt,” with the researchers noting that the burden often forces families to choose between health care payments and rent.

“These findings have critical implications, especially in an evolving policy environment,” the authors of the study wrote. “For one, the 2025 budget reconciliation act, signed into law on July 4, 2025, represents a considerable rollback of health insurance coverage in U.S. history, marked by significant changes to the Medicaid program, including work requirements and eligibility redeterminations every 6 months, among other reforms. As a result, an estimated 7.6 million individuals in the U.S. are projected to lose health insurance coverage by 2034. These changes raise concerns about the affordability of care that ultimately may contribute to the growing burden of medical debt, potentially igniting a cascade of consequences that imperil housing stability.”

From an analytical perspective, the study raises a classic “chicken or egg” dilemma. While the correlation is clear — people who struggle to pay medical bills often struggle to pay for housing — the underlying driver is frequently a lack of liquid assets or a sudden loss of income. In many cases, medical debt is a symptom of a broader financial collapse rather than the sole catalyst for an eviction.

The study found that about 10% of U.S. adults carry medical debt, and those individuals had significantly higher odds of experiencing housing distress. However, the data also shows that these same individuals often carry multiple types of consumer debt. This suggests that while medical debt is a visible weight, the broader issue for the accounts receivable management industry is how to navigate a consumer’s total financial picture while maintaining compliance with shifting federal guidelines.

Regulatory Response to Medical Debt

Following the 2025 federal court decision that vacated the Consumer Financial Protection Bureau’s attempt to ban medical debt from credit reports, the battleground has shifted to the states.

On Jan. 12, 2026, ACA International filed an amended complaint against Colorado’s House Bill 23-1126, a law that prohibits the reporting of medical debt information. ACA and plaintiff Creditors Bureau USA argue that the Colorado law violates the preemption provisions of the Fair Credit Reporting Act and infringes on First Amendment protections for truthful commercial speech.

“We’re protecting the reliable credit reporting that lenders, consumers, and businesses depend on nationwide to make well-informed credit decisions,” said ACA CEO Scott Purcell.

For the accounts receivable management industry, the Colorado case is a pivotal stand against a patchwork of conflicting regulations that undermines the uniform national credit system established by Congress.

ACA’s Take

To help members navigate the medical debt landscape, ACA provides the following resources:

• Industry Advancement Fund: This fund powers the legal and advocacy strategies necessary to challenge unconstitutional state bans like Colorado’s HB 23-1126.
• Healthcare Collection Manager® (HCM) designation: To achieve this professional development accomplishment, you’ll explore topics like working with third-party payers related to charitable care, 501(r), insurance, and building strong relationships with your medical clients.
• From Rookie to Rockstar: A Roadmap to Healthcare Collection Excellence: In this course, you’ll learn the key ingredients for transforming a rookie collector into an exceptional rockstar collector in the healthcare collections industry.
• Ask AVA: Use our new AI assistant, AVA, to locate more information about medical debt collection, including these news articles:

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