Medical bills underlie 60 percent of U.S. bankruptcies

Jun 4 2009

"Medical bills are involved in more than 60 percent of U.S. personal bankruptcies, an increase of 50 percent in just six years, U.S. researchers reported on Thursday," according to Reuters.

The researchers found that "more than 75 percent of these bankrupt families had health insurance but still were overwhelmed by their medical debts." Most of them were "well-educated, owned homes and had middle-class occupations," the researchers from Harvard Law School, Harvard Medical School and Ohio University wrote in the American Journal of Medicine.

The authors of the study, Dr. David Himmelstein and Dr. Steffie Woolhandler of Harvard, are single-payer plan advocates. "Only single-payer national health insurance can make universal, comprehensive coverage affordable by saving the hundreds of billions we now waste on insurance overhead and bureaucracy," Woolhandler said. Neither Congress nor President Barack Obama is seriously considering a single-payer proposal.

Their research, which "surveyed 2,134 random families who filed for bankruptcy between January and April in 2007, before the current recession began," was funded by the Robert Wood Johnson Foundation. "While only 29 percent directly blamed medical bills for their bankruptcy, 62 percent had medical bills that totaled more than 10 percent of family income, said an illness was responsible, had lost income due to illness or some other medical factor," Reuters said (Fox, 6/4).

The LA Times adds that "President Obama's push for healthcare reforms gets a boost" from the study. The increase in medical bankruptcies "occurred despite a 2005 law aimed at making it more difficult for individuals to seek court protection from creditors" (Girion, 6/4).

CQ Politics also reports on the many insured Americans whose "policies just aren’t comprehensive enough to protect them from potentially crushing bills." "As costs rise and employer benefits become weaker, the phenomenon of 'underinsurance' has become increasingly common, patient advocates say." A Commonwealth Fund study found that "about 25 million Americans had inadequate health coverage in 2007." Regulation of insurance plans historically "has been left up to the states, with the result that insurance protections vary widely around the country." Consumer groups say the federal government should take a new roll in "spelling out exactly what should be covered." But conservatives say it's not the role of the government, and they "question whether Congress is capable of coming up with a workable solution." An important question in regulating insurance plans is "where to draw the line between guaranteeing that benefits will be adequate and requiring so much coverage that all policies become more expensive" (Benson, 6/4).