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HEALTH COSTS SPUR BANKRUPTCY
Half of all U.S. bankruptcies are caused by soaring medical bills and most people sent into debt by illness are middle-class workers with health insurance, researchers said Wednesday. The study, published in February 2005 in the journal Health Affairs, estimated that medical bankruptcies affect about 2 million Americans every year, if both debtors and their dependents are counted.
"Our study is frightening. Unless you're Bill Gates, you're just one serious illness away from bankruptcy," said Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School who led the study. "Most of the medically bankrupt were average Americans who happened to get sick. Health insurance offered little protection."
The study questioned over 1700 bankruptcy filers in 2001 in California, Illinois, Pennsylvania, Tennessee and Texas. Over 900 of those questioned had more detailed interviews about their medical and financial circumstances. The study provides that illness and medical bills were cited as the cause for half the bankruptcies. Three-quarters of the bankruptcy filers reported having had health insurance coverage at the time they were diagnosed with the illness that triggered the bankruptcy. The average bankruptcy filer surveyed had spent $13,460 on co-payments, deductibles and uncovered services if they had private insurance.
His report shows that during the two years prior to filing bankruptcy:
- 54% failed to see a doctor or dentist due to cost
- 43% did not fill prescriptions because of cost
- 15% had taken out second or third mortgages to pay for medical expenses
Clearly, employment based coverage sometimes fail to protect families, because illness may lead to unemployment and the consequent loss of insurance coverage. The frightening conclusion to this study is that "even middle-class insured families often fall prey to financial catastrophe when sick," the researchers wrote.
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