Outrageous Medical Costs Responsible for Half of All Bankruptcies: Even Those With Health Insurance Are at Risk
Portion of article featured in "Magic City Morning Star"
By Harvard Law School
February 2, 2005
About half of all bankruptcies in 2001 were the result of medical problems and, surprisingly, most of those (more than three-quarters) who went bankrupt were covered by health insurance at the start of the illness.
Medically related bankruptcies involved some 700,000 U.S. households in 2001. When all of those affected were added up -- some 700,000 children and 600,000 spouses, elderly parents and other dependents -- the number of people reached more than 2 million annually.
Often, the bankrupting illness led to job loss and therefore a loss of health insurance. As a result, one-third of those with private insurance lost coverage by the time of bankruptcy.
It was found that illness and medical bills contributed to at least 46.2 percent, but perhaps as many as 54.5 percent, of all bankruptcy filings.
On average, out-of-pocket medical costs reached $13,460 for those with private insurance and $10,893 for those with no insurance. Ironically, those with the highest costs, on average about $18,000, were people who initially had private health insurance but lost it after becoming ill.
To get an idea of the scope of the problem, the authors noted that many families went bankrupt from medical expenses well below the "catastrophic thresholds" of many high-deductible insurance plans, and that their own medical coverage from Harvard even leaves them at risk of having to pay medical costs above those that led many families to bankruptcy.
The researchers went on to say that rethinking health reform is necessary. Health insurance offered little protection for families when a serious illness brought on co-payments, deductibles and bills for uncovered items like physical therapy and prescription drugs. Bankruptcy was often the last resort for families to get their lives back on track.
End of Article
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