By David U. Himmelstein, M.D.; Robert M. Lawless, J.D.; Deborah Thorne, Ph.D.; Pamela Foohey, J.D.; and Steffie Woolhandler, M.D., M.P.H.
AJPH, March 2019
In surveys conducted by researchers with the Consumer Bankruptcy Project in 2001 and 2007, a majority of recently bankrupt debtors implicated medical bills or illness-related work loss as causes of their bankruptcy, findings that President Obama used to argue for passage of the Affordable Care Act (ACA). The ACA both expanded and upgraded health insurance coverage, banning preexisting illness exclusions, imposing a cap on out-of-pocket spending, and mandating coverage for essential benefits. Although these reforms might attenuate the risk of medical bankruptcy, increasing medical costs and stagnant incomes could have the opposite effect.
We sought to assess the incidence of medical bankruptcy in the current era using methods similar to those employed by the Consumer Bankruptcy Project in its 2001 and 2007 surveys.
The share of debtors reporting a medical contributor before the ACA’s January 1, 2014 implementation (65.5%) and after implementation (67.5%) was similar (P = .37). Both of these figures are close to the 62.1% estimate from the 2007 survey, and in a difference-in-differences analysis we found no evidence that trends differed between states that did versus did not accept the ACA’s Medicaid expansion (P = .76). The responses regarding individual items in the current survey are also similar to those in 2007, when 57.1% of debtors cited medical bills as contributors to their bankruptcy and 40.3% cited income loss due to illness.
Medical bankruptcy has garnered public attention because it resonates with the abuse that Americans—including many middle-class Americans—suffer at the hands of our health care finance system. Despite gains in coverage and access to care from the ACA, our findings suggest that it did not change the proportion of bankruptcies with medical causes.
Moreover, medical costs continue to outpace incomes, 29 million remain uninsured, and many of those with health insurance face unpredictable and unaffordable out-of-pocket costs as copayments and deductibles ratchet up. And few Americans have adequate disability coverage, leaving them vulnerable to illness-related income loss that amplifies the financial distress caused by medical bills.
Although death is inevitable, good public policy can ensure that financial suffering from illness is not.
By Don McCanne, M.D.
The Affordable Care Act did not change the proportion of bankruptcies with medical causes. “The share of debtors reporting a medical contributor before the ACA’s January 1, 2014 implementation (65.5%) and after implementation (67.5%) was similar.”
A well designed single payer Medicare for All program would essentially eliminate medical bills as a contributing cause to bankruptcy though we would still need more effective programs that would replace lost income due to illness – income that would be required to meet basic needs.
The Affordable Care Act has not provided enough financial protection for those with health care needs, and merely adding to the insurance market another public option, as many politicians are suggesting, will do essentially nothing to reduce the scourge of medical bankruptcy. We need to enact and implement Single Payer Medicare for All if we want to seriously address this problem.
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