Personal Bankruptcy and Health Care Reform

By Meg Brown

Whether you prefer your news on FOX or NPR, there is no denying that the air is thickening around the subject of health care reform in this country. Arguments favoring this tinker or that tamper satisfy some and enrage others. Regardless of what approach people favor, there is one unifying acknowledgement: It is that some meaningful reform must soon be in place before the current system bankrupts our nation.

In fact, many individual Americans have already been bankrupted through devastating encounters with our current health care system. This past summer, the respected American Journal of Medicine released new study findings that revealed some staggering statistics that reveal the role that medical expenses play in personal bankruptcy filings. Working to reduce the margin of error in their findings, the authors applied a stringency to the study that made it a first of its kind: a truly random sample of bankruptcy filers nationwide, followed up with detailed personal interviews of participants. Medical causes of bankruptcy were defined to include medical bills and loss of income due to health issues. In conclusion, they discovered that more than 60% of personal bankruptcy filings in 2007 had significant medically related expenses that pushed individuals and families over the financial edge to file for bankruptcy.

CNN interviewed an author of the study, Steffie Woolhandler, M.D. who made this concluding comment: "If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that's the major finding in our study." A comment coming from the D.C. based nonpartisan Center for Studying Health System Change in response to the American Journal of Medicine's study held some skepticism about what actually precipitated the bankruptcy filings but did own that medical expenses were a key player, considering that 1 in 5 American families are "unduly strained" by medical bills.

In the 20 year span from 1981 to 2001, there was a major jump in the percentage of families filing for medically related bankruptcy, a rise from 8% to 46%. The earlier numbers may not have accurately reflected the role of medical bills in the bankruptcy filings, because court records were the means through which the statistics were gathered. Court records do not include the origin of debt that was owed to collection agencies, quite possibly obscuring the role of medical bills. Nevertheless, the American Medical Journal's most recent 2007 figures of nearly 62% medically related bankruptcy, indicate an unprecedented escalation over a 6 year period. Add that trend to what is still the unknown fallout of our economy's current recession and we may have some even more frightening revelations.

The popularly held mental picture of the average personal bankruptcy filer as a shiftless individual is completely dispelled by the AJM study. In this nationwide random sample, the majority of debtors were middle aged, middle class and college educated. The majority, 75%, had medical insurance policies when their debt and health problems started. Their insurance had the industry's standard gaps of copayments, high deductibles and services that were not covered. Nationally, 50% of insurance companies rescind individuals' policies within one year of being diagnosed with a disabling condition and many are immediate cancellations.

It is hard to ignore that the middle class' back is being gradually broken under the weight of the current insurance system. Health insurance premiums skyrocket every six months and deductibles on most policies follow a similar skyward pattern annually. Proponents of the American Dream have traditionally contended that what is bad for the middle class is bad for the nation as a whole. Currently, it is estimated that the U.S. will spend 17.6% of its GDP (Gross Domestic Product) on health care in 2009. The future holds an ever upward spiral if reforms are not soon brought into play. A further consideration of this staggering GDP statistic is to realize that it does not and cannot take into account all the associated costs that medically related bankruptcy of individuals or small businesses impose on the economy and society.

Do a quick online search for this American Journal of Medicine study and review it in its entirety for yourself (www.amjmed.com, Vol. 122, Issue 8 pp. 741 to 746). As a citizen, you owe this brief time investment to both you and your country. Inform yourself and do not leave decision making of this kind solely and silently in the hands of your elected officials. It doesn't hurt to remember that your representatives have plump health insurance packages that the average Joe is barred from participating in.

About the Author:

About the author: Meg Brown is a writer and grass roots activist for consumer credit awareness. She urges those who sense they are drowning in fiscal disaster to become familiar with their legal options and seek free debt consultation from a trusted bankruptcy lawyer. She encourages readers to learn more through Bankruptcy Facts and Filings by a Lowcountry SC Bankruptcy Attorney.

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