Study Links Medical Costs and Personal Bankruptcy
June 17, 2009 | General
Harvard researchers say 62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems—and 78% of those filers had insurance
By: Catherine Arnst
Medical problems caused 62% of all personal bankruptcies filed in the U.S. in 2007, according to a study by Harvard researchers. And in a finding that surprised even the researchers, 78% of those filers had medical insurance at the start of their illness, including 60.3% who had private coverage, not Medicare or Medicaid.
Medically related bankruptcies have been rising steadily for decades. In 1981, only 8% of families filing for bankruptcy cited a serious medical problem as the reason, while a 2001 study of bankruptcies in five states by the same researchers found that illness or medical bills contributed to 50% of all filings. This newest, nationwide study, conducted before the start of the current recession by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a sociology professor at Ohio University, found that the filers were for the most part solidly middle class before medical disaster hit. Two-thirds owned their home and three-fifths had gone to college.
But medically bankrupt families with private insurance reported average out-of pocket medical bills of $17,749, while the uninsured’s bills averaged $26,971. Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658. “For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments, and deductibles that illness can put you in the poorhouse,” said lead author Himmelstein. “Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy.”
The study underscores President Barack Obama’s arguments in calling for health-care reform legislation this year. In a letter to Democratic Senate leaders this week, the President said: “Health-care reform is not a luxury. It’s a necessity we cannot defer. Soaring health-care costs make our current course unsustainable. It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need.”
Highest Costs for Diabetes, Neurological Illness
The study was funded by the Robert Wood Johnson Foundation and published online June 4 by the American Journal of Medicine. It will appear in the Journal’s August print edition. The researchers examined the court records of a random sample of 2,314 bankruptcy filings across the nation during early 2007, and also contacted those filers for written explanations. The researchers then followed up with extensive phone interviews of 1,032 of those filers.
They found that a number of medical factors contributed to a family’s financial disaster. More than 90% of medically related bankruptcies were caused by high medical bills directly or medical costs that were so high the family was forced to mortgage their home. The remaining 8% went bankrupt because a medical problem caused them to lose income. The authors were not able to track credit-card defaults caused by medical bills, but a 2007 study found that, of low- and middle-income households with credit-card debt, 29% used their plastic to pay off medical expenses.
Individuals with diabetes, one of the most common chronic diseases in the U.S., and those with neurological illnesses such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167, respectively. Hospital bills were the largest single expense for half of all medically bankrupt families.
Dr. Woolhandler, an advocate of a single-payer health-care system, said lawmakers in Washington should reconsider health-care reform in light of the study. “Covering the uninsured isn’t enough,” she said. “Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it.”
Arnst is a senior writer for BusinessWeek based in New York.
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Comment by notthere June 23, 2009
May be we need to look after democracy here before we tell other countries how to live.
I’ve had enough of the posturing, lying, propaganda and hypocrisy. It’s time to hold feet to the fire.
We’re not going to get the obvious, sensible and real solution to US healthcare which is single payer, (No, that doesn’t necessarily exclude private insurance.) combining Medicare, Medicaid, SCHIP, Federal, VA and the military, dumping all the unnecessarily different bureaucracies, and building a realtime medical IT system. The X-factor insurance costs.
If any of our representatives and senators want to vote against a federally funded public option, how about they give up their federal healthcare. Give them an extra $12,700 a year or so (the average family cover 2008), no tax break, and let them find their own.
And with ethics oversight to make sure they don’t get deals or care other people can’t.
Let’s see if they like the insurance company control over their doctor’s choices and their choice of doctors. Let’s see what they call rationing. See how they like having to employ someone to fight their bills for them — god knows they are too incompetent to do it themselves. Let’s see what they think about nationalised health, socalization, and socialized medicine then.
Below’s what I already sent my senator and rep (Klobuchar/Ellison) with some modification for them. We need a whole load of people to put these shits in a position of shame. We need this to spread exponentially. I’m going to spend the next few hours working the blogs and internet talking about healthcare, and hit all the Senators and as many reps as possible (though most won’t accept non-constituents).
Help me, please. Hit all blogs, reps, sens, etc.
I recommend putting this somewhat in your own words.
==============================
Representative/Senator ———,
I write to you concerning healthcare.
I understand the inertia impeding the attempt to make healthcare cheaper, more effective and efficient, far less complicated, and universal. Single payer, which would not necessarily mean no private insurance, is the way to go. Adding a publically (federally) funded option is a key if small, and complicating, step on this route.
In order to avoid any perceived conflict or hypocrisy, I recommend that any senators or representatives voting against a public option renounce their federal healthcare coverage and receive an additional $12,700 per annum (or equivalent, as this was the average health insurance family coverage premium in 2008), no tax breaks (like every other private insuree), and ethics oversight to prevent insurance company favoritism in cost, coverage or service, or federal help in fighting the bills or for care.
Let’s see who is against a public option then.
I thank you for your service.
Sincerely,
My name
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One of the Republican “talking points” is to tell anyone that is rich and says that they are willing to pay higher taxes to “Go ahead; pay more taxes. Send a check to the IRS.” Let’s all start hitting these people.
The young may not think this matters but I have been in the States almost 30 years and healthcare has gone from 8 to 17% GDP of a much bigger GDP per capita. 30 years from now?
The CBO itself says it is not mostly about the baby boomers but rising health costs.
Please take time to put this out. Can we make this national?
Write.
Thanks.
Comment by Beth August 11, 2009
nothere,
I agree with you totally about your statement:
“If any of our representatives and senators want to vote against a federally funded public option, how about they give up their federal healthcare.” But I would not give them any extra money. They make enough already, from lobbyists and other income. And I do agree that there should be some over sight to make sure that they are treat the same as us the taxpayers.
I wonder how they would feel if they had to get their own insurance and had a preexisting condition?
I also have sent many letters to my representatives and have searched the web for all info I can.
Thanks for your comments. It sure is refreshing to hear someone who shares my opinion.