Middle-Class Workers With Health Coverage Represent Most Medical Bankruptcies In America(Health Affairs)
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Wednesday, Feb. 2, 2005, 12:01 a.m. EST
Contact: Jon Gardner
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Middle-Class Workers With Health Coverage Represent Most Medical Bankruptcies In America, Health Affairs Article Says
Authors Say Trend Shows Need For Safety-Net Program For Chronically Ill, Importance Of Separating Health Coverage From Employment
BETHESDA, MD—About 2 million Americans a year are in families that experience a bankruptcy following illness or injury, representing about half of all bankruptcies in the United States. Most of those filings were middle-class workers who had health insurance at the onset of their medical difficulties, according to an article posted today on the Health Affairs Web site.
David U. Himmelstein, associate professor of medicine at Harvard Medical School, and three colleagues reviewed 1,771 personal bankruptcy documents in five federal judicial districts in 2001, and conducted follow-up surveys with 931 of those debtors to determine how illness contributes to bankruptcy in America.
While the number of overall bankruptcies was 3.6 times higher in 2001 than in 1980, the number of health-related bankruptcies increased 23-fold over the same period, which suggests that high medical bills were a major contributor to the growth in the number of individuals seeking federal bankruptcy protection.
“The medical debtors we surveyed were demographically typical Americans who got sick,” Himmelstein says. “They differed from others filing for bankruptcy in one important respect: They were more likely to have experienced a lapse in health coverage. Many had coverage at the onset of their illness but lost it. In other cases, even continuous coverage left families with ruinous medical bills.”
Among the survey’s findings:
- Between 1.9 million and 2.2 million Americans (filers plus dependents) were affected by medical bankruptcies in 2001
- Three-quarters of the debtors had insurance at the onset of the bankrupting illness
- Out-of-pocket costs for those bankruptcy filers since the onset of illness or injury averaged $11,854
- Medical debtors were 42 percent more likely than other debtors to experience a lapse in health insurance coverage
- As they experienced financial trouble, 61 percent of the filers failed to seek medical treatments they needed
“As in Canada and most of western Europe, health insurance should be divorced from employment to avoid coverage disruptions at the time of illness,” Himmelstein says. “Insurance policies should incorporate comprehensive stop-loss provisions, closing coverage loopholes that expose insured families to unaffordable out-of-pocket costs. Additionally, improved programs are needed to replace breadwinners’ incomes when they are disabled or must care for a loved one.”
Himmelstein’s coauthors are Elizabeth Warren, a professor at Harvard Law School in Boston; Deborah Thorne, assistant professor in the department of sociology and anthropology at Ohio University in Athens; and Steffie Woolhandler, associate professor of medicine at Harvard.
You can read the article at content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.63
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Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Additional peer-reviewed papers are published weekly online as Health Affairs Web Exclusives at www.healthaffairs.org. Health Affairs Web Exclusives are supported in part by a grant from the Commonwealth Fund.