The Surprising Connection Between Health Insurance and Foreclosure

Medical debt, like most other debt, is intrinsically linked to one’s housing stability. After an illness or injury, resulting bills—even a couple thousand dollars—can be crushing. A 2024 report by Petersen-KFF, a nonpartisan partnership that conducts healthcare research, notes that more than 40 percent of adults have health care debt to providers, on credit cards, or owed to family; a separate KFF study found that one in five medical debt holders have been forced to change their living situation. Following an informal 2023 survey of individuals facing eviction and foreclosure conducted by Denver’s Community Economic Defense Project, NPR reported that "close to half" of respondents said "medical debt played a role in their housing issue, with about one in six saying it was a major factor." In many states, it’s legal for debt collectors to garnish wages, lower a credit score, and place a lien on or repossess a debtor’s home.

Now, medical debt is about to get a whole lot worse. Under the recently passed Big Beautiful Bill (BBB), which cuts Medicaid by $1 trillion over the next decade, at least 10 million Americans will lose access to their health insurance, though estimates vary between 10 and 17 million. It will soon be much more difficult for Americans to find their way to covered care: The bill includes removal of streamlined enrollments, new work requirements, and more that will affect the most vulnerable, including the 2.6 million disabled enrollees who don’t qualify for Supplemental Security Income or Social Security Disability Insurance. Renters and low-income or working-class homeowners alike will face new levels of precarity, as no one is immune—or can predict—accidents and illnesses.

Perusing the "medical" category on GoFundMe, there are thousands of campaigns to support individuals and families managing medical crises. You’ll find many mentions of pending evictions or foreclosures as a result of disabling events or long hospitalizations. Saddled with medical debt owed to providers or collection agencies while trying to catch up with past-due bills, these individuals compose pleas to remain in their homes. Some individuals had health insurance that didn’t fully cover treatment; the American Medical Association (AMA) attributes our mounting medical bills to a number of factors, including insufficient coverage that leads to surprise coverage gaps, and complicated health plans with opaque benefits. Others lack insurance—some because they lost their job while in the hospital—and speak to the fact that nine percent of Americans are uninsured entirely, a debt factor that tops the AMA’s list.

Still, it’s a significant improvement from our pre-Obamacare era, when 50 million Americans lacked coverage. In 2008, at the height of the Great Recession’s foreclosure crisis and prior to the Affordable Care Act (ACA), scholars at the Boston University School of Law authored an article that surveyed homeowners going through foreclosure in four states. Nearly half of their respondents attributed their foreclosure to a medical problem—23 percent of those said it was due to medical bills.

For those uninsured millions, accessing insurance was game-changing. Not only did the ACA reduce then-mounting medical debt, it also helped people make their home payments. A 2019 study led by University of Colorado Leeds School of Business professor Emily Gallagher found that access to health insurance marketplace subsidies reduced missed home payments for both low-income owners and renters. As Gallagher told CNBC, "access to the subsidized marketplace plans means that, instead of having roughly a one-in-three chance of being delinquent, your chances of being delinquent look more like one-in-five."

The ACA wasn’t perfect, and certainly didn’t completely unravel how extremely expensive it is to get sick in America—especially for those with chronic care needs. But data shows how strong social safety nets can prevent people from losing their homes. Some states have approached the problem with the moral considerations that medical debt requires: Across the U.S., a patchwork of state regulations and laws have helped protect residents from debt’s worst effects.

According to a 2023 report from the Commonwealth Fund, more than 30 states across the red-blue spectrum, including Florida, Washington, Minnesota, and the Carolinas have employed medical debt protections like requiring hospitals to provide payment plans, limiting wage garnishment, limitations or waiting periods on credit reporting, or laws against placing liens and forcing homeowners into foreclosure. Illinois, for example, passed a law in 2024 that made medical debt (excluding debt paid with a credit card) ineligible to be included on a credit report; later in 2025, Governor JB Pritzker created a statewide medical debt relief program to purchase and forgive more than $345 million in medical debt from 270,000 state residents. Seventeen states, including New York, New Mexico, and Nevada, have protections against liens and/or foreclosures, while only a few states like Texas, North Carolina, and Pennsylvania fully prohibit wage garnishment, per Commonwealth.

Such policies might not prevent healthcare costs from rising, nor are they panaceas to the larger problem of private insurance that leaves a lot of very sick people in the cold. But even a small protection, like preventing one’s medical bills from showing up on a credit report when applying for an apartment, can prevent people from becoming unhoused. We can’t avoid becoming statistics, as injury and illness will come for us all, but we can enact protections that ensure we’ll have a home to recover in. 

The BBB’s cuts won’t begin to take effect until after the midterm elections in 2026, so state legislatures might see an opportunity now to begin girding their populations from its harshest effects. 

Top photo by Ariel Skelley via Getty Images.

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