In early January, the Consumer Financial Protection Bureau (CFPB) finalized a policy to eliminate medical debt from credit reports. This decision is particularly important for individuals burdened by unexpected health-care costs and represents a pivotal shift in how Americans manage and finance their medical expenses.
But the Trump administration aims to diminish the CFPB. While the bureau’s shortcomings are certainly up for debate, the policy to remove health-care bills from credit reporting must be kept in place to protect patients from predatory billing practices. In a truly fair system, a hospital bill would reflect the actual cost of care, with a reasonable margin, not an arbitrary, inflated price designed to exploit people at their most vulnerable moments.
One of the most egregious failures of the American health-care system is the way it handles emergency medical situations. When someone experiences a medical crisis, a heart attack, a stroke, or a severe injury, they don’t have the luxury of choosing which hospital will treat them. Instead, they are transported by ambulance to the nearest or most convenient hospital, often with no say in the matter. In any other industry, consumers choose their providers based on price, quality, and personal preference. But in health care, patients are stripped of that basic right the moment they need urgent care.
Price gouging
Going to an emergency room and being charged an arbitrary amount is strikingly similar to price gouging during a natural disaster. They both exploit people in situations where they have no real choice. When a hurricane, wildfire, or other disaster strikes, people often scramble to evacuate, needing essential supplies like gas, food, and lodging. Take the hoarded personal protective equipment (PPE) during the COVID-19 pandemic, for example. In one case, a company was found guilty of purchasing 250,000 KN95s—filtering facepiece respirators—from a foreign manufacturer and selling 100,000 of them to New Jersey grocers for a 400% markup. The National Library of Medicine found that factors like price gouging, demand shock, and disrupted supply chains contributed to “significantly elevated” PPE costs for national hospitals through the first wave of the pandemic. Examples like this illustrate why price-gouging is illegal in many states. The logic behind banning it is simple: When people are in crisis, they shouldn’t be exploited for basic needs.
Hospitals do essentially the same thing with emergency care. When someone experiences a life-threatening event, they don’t have time to compare prices or shop around for the best hospital. They are taken to the nearest facility, treated without being told the cost, and later hit with an outrageous bill that has no correlation to the actual cost of providing care.
The key similarity is coercion under duress. In both cases, people are not making free-market decisions; they are making life-or-death decisions with no ability to negotiate or walk away. Just as a gas station in a disaster zone is not operating in a fair market when it triples its prices, hospitals are not operating in a fair market when they bill patients thousands of dollars for care they never agreed to at a set price.
Health-care reform
If price gouging is unacceptable in the wake of a hurricane, why is it tolerated in health care, where the stakes are just as high? The reality is that hospitals are engaging in a legalized form of extortion, exploiting the lack of alternatives in emergencies to maximize profits at the expense of patients. It’s a broken system that prioritizes financial gain over fairness and transparency, and it needs serious reform.
Hospitals justify their arbitrary pricing by citing administrative complexity, uncompensated care, and the burden of uninsured patients. But these are just excuses for a system that lacks transparency and accountability. Unlike a free market, where businesses compete for customers by offering fair prices and quality services, emergency health care operates as a monopoly. The patient has no bargaining power, no knowledge of the price beforehand, and no way to opt out of the service.
Additionally, medical debt is a flawed indicator of creditworthiness. Unlike consumer debt—such as credit card balances or personal loans—medical debt is often incurred unexpectedly due to emergencies, illnesses, or accidents. According to data compiled by the Commonwealth Fund, 72% of medical debt stems from acute care situations like hospital stays or accident treatments—or in other words, unexpected emergencies. Individuals rarely choose to take on medical debt in the same way they might choose to finance a car or make purchases on credit. Yet, for years, unpaid medical bills have unfairly damaged credit scores, limiting access to mortgages, auto loans, and even employment opportunities.
Penalizing people for medical debt exacerbates the financial instability that the traditional health-care system already creates, functioning as a form of entrapment by forcing individuals into a cycle of financial hardship that benefits hospitals, insurance companies, and collections agencies while punishing patients. Many traditional insurance models leave individuals with unexpected out-of-pocket costs, high deductibles, and confusing billing practices, leading to debt accumulation. This debt, when reported to credit agencies, makes it even harder for individuals to recover financially.
The CFPB’s policy ensures that people are not punished for their health-related expenses, allowing them to focus on recovery rather than financial ruin. While the bureau’s future remains to be decided, this policy must be kept in place to reduce the long-term consequences of an already predatory system and allow people to rebuild their financial standing more fairly. Until this system changes, Americans will remain trapped in a cycle of medical debt, forced to pay whatever price hospitals decide after the fact. And that isn’t just unfair, it’s extortion.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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