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Soaring medical bills account for half of all U.S. bankruptcies

Friday, February 4th, 2005

A new study in the journal Health Affairs has found that half of all personal bankruptcies in the United States are now caused by soaring medical bills. We speak with the author of the report, Dr. Steffie Woolhandler. [includes rush transcript]

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In addition to focusing on restructuring Social Security, President Bush also spoke about the rising costs of healthcare in this country.

* President Bush, State of the Union address, February 3, 2005:
To make our economy stronger and more productive, we must make health care more affordable, and give families greater access to good coverage — (applause) — and more control over their health decisions. I ask Congress to move forward on a comprehensive health care agenda with tax credits to help low-income workers buy insurance, a community health center in every poor county, improved information technology to prevent medical error and needless costs, association health plans for small businesses and their employees — (applause) — expanded health savings accounts and medical liability reform that will reduce health care costs and make sure patients have the doctors and care they need.

President Bush in his State of the Union address. His comments come as a new study has found that half of all personal bankruptcies in the United States are now caused by soaring medical bills. The Harvard University study – published in the online journal Health Affairs – estimated medical bankruptcies affect about 2 million Americans every year, including 700,000 children. Many of those filing for bankruptcy had insurance, at least at the start of their illness.

*Dr. Steffie Woolhandler, Associate Professor of Medicine at Harvard University and co-director of the Harvard Medical School General Internal Medicine Fellowship program. She is a co-founder of Physicians for a National Health Program. She co-authored the study on medical bankruptcies.
Read the report.
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RUSH TRANSCRIPT

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AMY GOODMAN: In addition to calling for tort reform, President Bush also speaks about the rising costs of health care in this country.

GEORGE W. BUSH: To make our economy stronger and more productive, we must make health care more affordable and give families greater access to good coverage, and more control over their health decisions. I ask Congress to move forward on a comprehensive health care agenda with tax credits to help low income workers buy insurance, a community health center in every poor county, improved information technology to prevent medical error and needless costs, association health plans for small businesses and their employees, expanded health savings accounts and medical liability reform that will reduce health care costs and make sure patients have the doctors and care they need.

AMY GOODMAN: And that was President Bush. Juan.

JUAN GONZALEZ: Yes, his comments come as a new study has found that half of all personal bankruptcies in the United States are now caused by soaring medical bills. The Harvard University study published in the online journal, Health Affairs, estimated medical bankruptcies affect about 2 million Americans every year, including some 700,000 children. Many of those filing for bankruptcy had insurance at least at the start of their illness.

AMY GOODMAN: Today we’re joined by Dr. Stephie Woolhandler, Associate Professor of Medicine at Harvard University, Co-Director of the Harvard Medical School General Internal Medicine Fellowship program and one of the co-founders of the Physicians for a National Health program. She joins us in the studio in Boston. Welcome, Dr. Stephie Woolhandler.

DR. STEPHIE WOOLHANDLER: Nice to be here.

AMY GOODMAN: Well, can you talk about the study that has just come out?

DR. STEPHIE WOOLHANDLER: Well, this is the first study to collect detailed financial and medical information from a large cross-section of people filing for bankruptcy in bankruptcy courts. As Juan indicated, we found that fully half of all bankruptcies in the United States are caused by medical illness and medical bills. We’re talking about three-quarters of a million American families pulled through the bankruptcy courts every year by medical illnesses and medical bills. When you count the debtors and their dependents and their children, we’re talking about 2 million Americans every year in bankruptcy due to medical illness and medical bills.

JUAN GONZALEZ: I think most of us would assume that these were folks that did not perhaps have insurance before, but your study found that most of them had insurance when they began, so what happened in the process? Did their insurance stop paying, or what were you able to tell from you study of those bankruptcy files?

DR. STEPHIE WOOLHANDLER: We most certainly were. Surprisingly, we found that 76%, more than three-quarters of all people in medical bankruptcy had health insurance at the onset of the illness that bankrupted their family. So, when the illness started, more than three-quarters of the people had health insurance. Many of them had private health insurance through their jobs. But about one-third of people with private health insurance lost their coverage during the course of the illness. Most often because a breadwinner became too sick to work, and when they couldn’t work, they lost their job-related health insurance. But another very common scenario was people hanging on — hung onto their health insurance throughout the illness, but over the course of two or three years of illness, they accumulated so much out of pocket payments, co-payments, deductibles, and especially excluded items like physical therapy, home care, drugs. Over a period of years, they accumulated so much in out of pocket expenses that they were bankrupted despite having health insurance throughout the illness.

AMY GOODMAN: Can you give us some examples, a particular personal example of someone who has gone bankrupt because of their soaring medical costs?

DR. STEPHIE WOOLHANDLER: Oh, absolutely. One woman was a school teacher. She suffered a major heart attack. She was out of work for many months, lost her health insurance because she was unable to work. She had a hospital bill of $20,000, which was not covered by any insurance. She went to the hospital, and talked to them, and got them to write off the hospital bill. But she was bankrupted nonetheless by doctors’ bills and by the costs of her medications. Eventually, she went back to work and was able to gain insurance again, but she had already been through bankruptcy because of the initial illness. That’s actually fairly typical story of how people ended up in bankruptcy.

JUAN GONZALEZ: But now, normally, wouldn’t someone — let’s say who is working and becomes sick and can no longer work, so they lose their private health insurance, wouldn’t they then fall into the category of a disabled worker who would not only get disability payments but possibly Medicaid coverage as well? In other words, what’s happening to the safety net that should be existing in these kinds of cases?

DR. STEPHIE WOOLHANDLER: Well, most of these people were — had too much money to qualify for Medicaid, but not enough money to pay for private health insurance, if they weren’t working. The average income of these families in the year they filed for bankruptcy was about $25,000 a year. So, they would not qualify for Medicaid, nonetheless, they’re not in a position to be paying $10,000 a year, which is the average cost of family coverage in this country, if you have to pay for it yourself.

AMY GOODMAN: In the piece, the study that came out, illness and injury, as contributors to bankruptcy, you say even universal coverage could leave many Americans vulnerable to bankruptcy unless such coverage is more comprehensive than many current policies. Talk about what you mean.

DR. STEPHIE WOOLHANDLER: Well, many people think they have good insurance. They think they have good insurance, until they get one of these major illnesses that goes on for months or years at a time. And then those co-payments and deductibles and uncovered services start to add up. In our study, the typical person who went into bankruptcy had accumulated about $4,000 a year in out of pocket expenses over a period of two or three years. So that they had about $12,000 in out of pocket medical expenses by the time they went into bankruptcy. But $4,000 in medical costs out of pocket is very easy to accumulate, even with the very best private policy. I happen to know because my own insurance policy through Harvard Medical School is absolutely the Cadillac plan. We get the best plan with the best coverage for our family, and when my daughter had a series of serious orthopedic injuries, two sports injuries in a row one year after another, we accumulated $5,000 in out of pocket costs between the co-payments, deductibles and particularly physical therapy, which her plan only covered two months of, and she needed seven months. We were $5,000 out of pocket a couple years in a row. Now, both her father and I were able to work. We weren’t disabled. It didn’t bankrupt us, but in the situation where a breadwinner is sick, and income falls, $4,000 or $5,000 a year in medical expenses will bankrupt you, and in fact that is what happened to the people in our study, and that’s with the Cadillac plan. That’s with the best of the private health insurance plans. So, what we really need is the kind of national health insurance that they have in much of Western Europe and in Canada where it’s not only universal, that is everyone has it, but it’s comprehensive. Anything that’s medically necessary is covered. Without limits, and artificial limitations that the insurance companies put on the care that people need.

JUAN GONZALEZ: But given the enormous problems that individuals are having with soaring medical costs and even health insurance costs at the same time that many, many large companies and certainly small businesses are also being tremendously squeezed by rising health costs, how is it that the public movement for national health insurance has not solidified in a more systematic or vocal way?

DR. STEPHIE WOOLHANDLER: Well, we do have a lack of political leadership out of both parties, an unwillingness to talk about national health insurance that we were very pleased to hear that Senator Kennedy recently made a major speech advocating what he calls Medicare for all, which would be a form of national health insurance. That would certainly be a good step on the road to covering everyone and giving them comprehensive coverage. I think many Americans are fooled, and they have that private insurance policy, and they think they’re covered. But for so many Americans, private insurance policy is like an umbrella made out of tissue paper. You know, it may look good. It may even help you out in the sprinkle, but it’s totally useless in a downpour. People have umbrellas that literally melt in the rain. When they get so sick that they can’t work, their private health insurance is gone or fails them.

AMY GOODMAN: We’re talking to Dr. Stephie Woolhandler, one of the people who did the study showing that more than half of the personal bankruptcies in the country are due to soaring medical costs. Also one of the leaders of the universal health care movement. What do you think it would take right now, Dr. Woolhandler, for this national movement to solidify? I mean, businesses, as you say, have an interest in this because they’re crushed by the cost. Certainly individuals who have no health insurance, those who have partial health insurance. The sense is that this would cost the country a tremendous amount. The Canadian system has been vilified. What do you think it would take?

DR. STEPHIE WOOLHANDLER: Well, first of all, people need to know that national health insurance would not cost a tremendous amount. For the money we’re now spending we could provide universal coverage, that is cover everyone. We could provide comprehensive coverage, that is, improve the coverage that middle class and insured people now have. Part of why you can do that is by going to national health insurance you generate tremendous savings on administration and paperwork. We have estimated that if the United States health care system were as administratively simple as Canada, we could save $300 billion a year just in paperwork and bureaucracy costs. That $300 billion is plenty of money to cover all of our 45 million uninsured and close the loopholes in the policies of people who now have insurance to make sure that everyone is insured for all medically necessary care and that no one would ever again have to go into bankruptcy because of medical bills.

JUAN GONZALEZ: And in terms of the Bush administration now, in the President’s words this week in his state of the union, what are going to be the initiatives over the next year or two by the Bush administration as you understand them in this arena, and what should people be looking for?

DR. STEPHIE WOOLHANDLER: Okay. Well, Bush left a lot unsaid, including a lot unsaid about what his big initiatives are going to be in health policy. One thing that he is pushing for is what we call nanoinsurance. Insurance policies that are so tiny you cannot see them. Insurance policies that amount to your name on a piece of paper and little else. His new Secretary of Health and Human Services, Mike Leavitt pioneered nanoinsurance when he was Governor of Utah, when he offered Medicaid enrollees an insurance policy that covered $1,000 in primary care, but had no coverage for specialty care, no coverage for hospitalization. He claimed that was insurance. That’s why we call it nanocoverage. Now Secretary Leavitt is saying we’re going to allow any state that wants to do whatever they want and call it health insurance. So, we’re going to be seeing much more of these state policies to shrink down Medicaid, to give people these tiny little policies that are really not protective, and certainly here within our own state, our Governor Romney has been saying, Oh we need to have affordable policies, by which he means these skimpy, nanocoverage policies. Unfortunately, many employers are going the same route. They use a different terminology. They call it consumer driven health care. But what they’re really talking about is saying to workers, You have to have skimpy coverage, stripped down coverage with huge deductibles, and we forget to tell you the fact that in fact if you get sick, you’re going to be bankrupted because the coverage is so skimpy. Similarly with the health savings accounts, the health savings accounts are typically, say, $1,000 in your health savings account, but coupled with a high deductible policy with a $5,000 or $10,000 deductible, meaning that a family could easily accumulate $4,000 to $9,000 in health insurance expenses if someone got seriously ill. What we found from our study is that $4,000 to $9,000 of health expenses particularly if you have it several years in a row, particularly if the breadwinner cannot work, is enough to bankrupt American families.

JUAN GONZALEZ: You mentioned also the states in this — and initiatives to get new state programs to reduce the Medicaid load, now, isn’t it a reality that states themselves should be another constituency in this battle because all of the states are being hit by soaring Medicaid costs. A big part of many state budgets now are just being able to pay for Medicaid, so you would think that they would be another constituent group that should seek some sort of a national comprehensive solution.

DR. STEPHIE WOOLHANDLER: Well, unfortunately many state governments are in the hands of conservative allies of the Bush administration. Even though the Bush cuts in Medicaid will be disastrous for their states, they are not being very vocal and speaking out about that. I mean the real constituency for national health insurance is the American people. Its not just poor people, its not just the 45 million uninsured people, but it’s solidly middle class American families who think they have good insurance until they get sick. The families bankrupted in our study were middle class. 56% of people in bankruptcy had gone to college. 56% owned their home. When we looked at their occupational status, they were in the middle range of occupations, secretaries, schoolteachers, nurses. These were not the poorest of the poor. These were families literally ripped out of the heart of the American middle class when they had the double disasters of getting sick, and often losing their jobs.

AMY GOODMAN: Finally, Dr. Woolhandler, we have a Democratic Party — you mentioned that Kennedy was talking about universal health care, but overall, the Democratic Party has not called for universal health care. Hillary Clinton in the ascendancy, she did not propose it when she had the ability to propose it, in fact was taken down in a very big way, even preserving the insurance companies. So, who will represent this alternative, this block for universal health care?

DR. STEPHIE WOOLHANDLER: Well, what we need to do is organize a movement to hold the politicians’ feet to the fire and say to them, Unless you support universal health care you will not get re-elected. That was something that was going on in the early nineties and late eighties, congressmen and senators who were being elected at least partially because they said they supported universal health care. So thats what its going to take. Its going to take a movement to raise the issue, to pressure our politicians to listen to their constituents rather than listening to the drug industry and insurance industry that now just about the only people benefiting from the current health care finance system.

AMY GOODMAN: Dr. Stephie Woolhandler, thank you very much for being with us, one of the people that did the study on the personal bankruptcies.

JUAN GONZALEZ: If people want to copy of the study —

AMY GOODMAN: If people want to get a copy, where can they go on the web?

DR. STEPHIE WOOLHANDLER: It’s on the website on healthaffairs. Its called a web exclusive but the journals name is Health Affairs. You can find them on the web. It will be on the web for a couple of weeks, and probably for a couple of months.

AMY GOODMAN: We’ll also link to it at democracynow.org.

DR. STEPHIE WOOLHANDLER: Thank you.

AMY GOODMAN: Dr. Stephie Woolhandler, Associate Professor of Medicine at Harvard University, Co-Director of the Harvard Medical School General Internal Medicine Fellowship and one of the co-founders of the Physicians for a National Health program.
http://www.democracynow.org/article.pl?sid=05/02/04/1537243
www.democracynow.org

Employers and millionaires recognize the adverse consequences of today's health plans

California HealthCare Foundation
February 2, 2005

California Employers View Health Care Cost-Sharing as Double-Edged Sword
Employers believe cost sharing encourages workers to spend wisely, but may
result in foregoing needed care

Increasing employee cost-sharing is now the most common strategy used by
California employers for reining in health care costs. But even as they shift costs, employers are concerned about the effects, according to recent surveys commissioned by the California HealthCare Foundation (CHCF) and conducted by Harris Interactive of California employers, residents, and adults who are chronically ill.

While the strategy has led a majority of employers to feel that their health care costs are more under control today than they were a couple of years ago, more than 75 percent of them now say cost-sharing causes consumers to forgo needed medical care and has a negative impact on individuals with chronic conditions. Over 40 percent of employers also believe that cost sharing reduces the productivity of workers.

Consumers confirmed employer concerns. The survey of the general population of adults in California found that one in seven adults had a medical condition but did not obtain care due to cost in the past year. Non-compliance with recommended medical treatment is particularly common among those with low incomes and those in fair or poor health, according to the survey.

http://www.chcf.org/press/view.cfm?itemID=108787

And…

kaisernetwork.org
Daily Health Policy Report
February 03, 2005
Survey Indicates Millionaires Not Insulated From Rising Health Costs

A new survey (by North Trust) of 1,312 people with “at least $1 million to invest, not including the value of their residences” indicates that significant assets do not “eliminate worries over increasing health care costs,” Dow Jones/Wall Street Journal reports.

North Trust Senior Vice President Thomas Hines said, “What happens is that when you’re no longer part of a larger group, health care plans have restrictions. If you have a catastrophic illness over a significant period of time, this can quickly” deplete benefits (Chu, Dow Jones/Wall Street Journal, 2/3).

http://www.kaisernetwork.org/daily_reports/rep_hpolicy.cfm

Comment: These two reports make it much easier to understand yesterday’s
Health Affairs article confirming that 76% of individuals with medical bills filing for bankruptcy had insurance coverage at the start of their illness. The CHCF/Harris Interactive survey confirms that three-fourths of employers now recognize that current employer-sponsored plans are no longer providing enough protection to ensure financial security in the face of medical debt.

But when millionaire investors are worried about the personal financial impact of health plan restrictions, we know that we’ve got a problem! (For those who are new to this list, I’ll say once again that we can remove all financial barriers to care and provide comprehensive coverage for everyone, without spending any more than the $1.8 trillion that we already spend, merely by adopting a universal single payer system.)

A Healthy Choice(In These Times)

A Healthy Choice
A movement builds to take on Wal-Mart
By Hans Johnson January 25, 2005
In These Times

Until last year, Wal-Mart, the global retail chain known for undercutting local competitors by curbing wages and benefits, enjoyed so much clout that it placed its sprawling warehouse stores practically at will. But grassroots challenges to the healthcare practices of Americas largest employer have stalled its expansion bids, exposing a bullying streak beneath its homey veneer of red, white and blue.

The skirmishes feature charges that Wal-Mart racks up huge profits while covering health care for just 45 percent of its workers and freeloading on taxpayers, who are stuck with the tab for the uninsured and their family members. The conflict pits a wide alliance of interfaith, labor and community groups against a retail chain whose profits topped $9 billion in 2003, with 3,200 outlets and 1.2 million employees in the United States alone.

In defending the very premise of the New Deal and reasserting the notion of a social contract, the campaign to rein in Wal-Mart could define the next decade of progressive organizing, policy and politics.

The platform that Wal-Mart keeps advocating is bringing in jobs to low-income communities? says Rev. Michael Pfleger of St. Sabinas Catholic Church in Chicago. But low-wage jobs, often without health care, keep families in poverty and keep people in shackles.

Pfleger marshaled a diverse coalition of ministers, small business owners and union activists that in May headed off Wal-Marts drive to change zoning laws and open a mega-market on his citys South Side. A Wal-Mart spokesman even had to refute charges that the companys wage and health policies are exploitative. We are not the evil empire he told USA Today. A majority of the aldermen were poised to block the proposal, and the bid was withdrawn.

At Wal-Mart, full-time workers have to endure six months ”and part-timers, two years” before applying for health coverage through the company. Wal-Mart told the New York Times in November that about 77 percent of its employees are eligible for health coverage through the company plan. But since Wal-Mart saddles its staff with 33 percent premiums, the coverage often costs more than $200 a month per worker to maintain”a steep price for workers making between $8 and $10 per hour. As a result, just 58 percent of those eligible, less than half of all workers, or about 537,000 people, actually have the insurance.

This compares with the complete coverage that became common for workers and their dependents after World War II. The rise of collectively bargained union contracts in the era of Franklin Roosevelt and Harry Truman gave rise to the notion of a so-called social contract. It stipulated that a worker receive livable wages and health benefits in return for loyal hard work.

Not all companies have torn up the social contract. Costco, a competitor in the large-scale retail business, provides insurance to more than 19 out of every 20 of its workers and pays more than 90 percent of the premium.

When Wal-Mart bows out on covering the healthcare costs of staff members, the public often picks up the tab. More than 10,000 Georgia children whose parents work at Wal-Mart are on a state health program, thus neatly passing on the $10 million yearly expense to state residents. And in California, taxpayers are footing the bill for about $32 million in healthcare costs from Wal-Mart workers that the employer would typically cover.

Such revelations are the latest black eye in a string of high-profile setbacks. In August, community activists along with union members involved in the Metropolitan Washington Council of the AFL-CIO discouraged Wal-Mart from plunking down a mammoth store in the citys northeast quadrant. Facing rising community hostility and the threat of bad publicity, Wal-Mart backed down.

The triumphs in Chicago and Washington follow an April victory near Los Angeles. By a two-to-one margin, voters in Inglewood rejected the retailers bid to circumvent a zoning board and approve a superstore widely seen as disruptive to local businesses, traffic patterns, and the quality of life.

Wal-Mart has fought back, joining with California Gov. Arnold Schwarzenegger in attacking a state ballot measure that would have mandated either corporate coverage for workers or payments into a state plan. Opposed by half a million Wal-Mart dollars, Proposition 72 very narrowly failed on November 2.

Local coalitions and policy-makers remain keen to put some checks on the retail giant. Wal-Mart executives chose to remove the responsibility from themselves. Mike Kreidler, former congressman and current state insurance commissioner for Washington state told the New York Times. He is working with state lawmakers to pass a measure similar to the California proposition.

Having succeeded in moving the debate about Wal-Mart beyond the publics almost religious fixation on low prices and into the realm of healthcare, activists are adhering to theologian Reinhold Niebuhrs encouragement to be wiser than our creed. Niebuhr, a mentor of Martin Luther King Jr., understood the danger of Americans being seduced into undermining their own way of life. Faced with a grave threat to healthcare, labor and community leaders are reasserting Kings vision of a beloved community and rising to the occasion to create it.

Hans Johnson, a board member of the BISC Foundation, writes about labor, religion and politics from Washington, D.C

Group pushes for national health insurance (Pittsburgh Post-Gazette)

Thursday, February 03, 2005
By Christopher Snowbeck

If you think government bureaucracy is bad, Mike Stout thinks you should look at the current state of private health insurance.

Stout, who owns a small printing business in Homestead, recently underwent treatment for a kidney stone at a local hospital. Since then, he’s received 56 separate documents from both his health plan and the hospital detailing his benefits and the various charges for his care.

When he underwent the same procedure at the same hospital seven years ago, Stout received just one statement of his benefits.

“My own insurance company can’t even explain all this,” Stout said. The flood of paperwork is indicative of a broader problem with administrative waste, Stout said yesterday at a Downtown news conference, where he joined union leaders and a physician in calling for a government-run national health insurance plan.

The group took as its point of departure a study released yesterday showing that about half of all personal bankruptcies in the United States strike people in the wake of a family illness or injury. The study found that many of those bankrupt households were led by middle-class workers who had health insurance at some point in their illness.

Using the study, researchers estimate that about 29,000 people in Pennsylvania were caught up in medically related bankruptcies last year, said Dr. William Wood, a Pittsburgh physician and member of Physicians for a National Health Program.

While some attorneys who handle personal bankruptcy cases in the Pittsburgh area questioned the study, at least one longtime practitioner said the findings matched her experience.

“I would say that about one-third of the bankruptcies are people who do have illnesses going on, or are elderly with medical issues,” said Carlota Bohm, a Downtown attorney who deals with personal bankruptcies.

Many households’ credit card debts are driven by medical bills, Bohm said, adding that she’d seen a significant increase in such cases in recent years.

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(Christopher Snowbeck can be reached at csnowbeck@post-gazette.com or 412 263-2625.)

Employers and millionaires recognize the adverse consequences of today’s health plans

California HealthCare Foundation
February 2, 2005

California Employers View Health Care Cost-Sharing as Double-Edged Sword
Employers believe cost sharing encourages workers to spend wisely, but may
result in foregoing needed care

http://www.chcf.org/press/view.cfm?itemID=108787

And…

kaisernetwork.org
Daily Health Policy Report
February 03, 2005
Survey Indicates Millionaires Not Insulated From Rising Health Costs

http://www.kaisernetwork.org/daily_reports/rep_hpolicy.cfm

Frist’s HSA Proposal a Nightmare for Patients

We dare not follow
Bush, Frist, Thomas have healthcare dreams
others might call nightmares

Story originally published January 31, 2005
Written by Todd Sloane, Assistant Managing Editor Op/Ed Modern HealthCare

Visionaries see problems differently than the rest of us, conjuring up solutions we ordinary folks could never divine. These are essential people, and yet there are times to beware of them, such as when they are thinking of running for president or are feeling the pressure of term limits. At such times be very cautious about following them. You could fall off a cliff.

Healthcare providers and their patients are treading close to such an abyss. President Bush, Senate Majority Leader Bill Frist (R-Tenn.) and House Ways and Means Committee Chairman Bill Thomas (R-Calif.) are dreaming the dreams of men with near absolute power and a short deadline.

Frist, who has promised to retire from the Senate in 2006, may be floating a bit higher than the others, having recently revealed his vision of healthcare in the year 2015 in of all places the New England Journal of Medicine. His alien dream is filled with accounts of injected nanorobots that detect and fix cancers and implanted radio frequency devices that continuously monitor goings on in our abdomens. At the head of this brave new healthcare system is the informed public, presumably the same erudite masses that would send the good Dr. Frist to the White House in 2008.

Not all of his visions are out of “Fantastic Voyage.” He returns to terra firma long enough to call for an end to tax incentives for employers who offer health coverage, which would effectively end that insurance system. The credits would go to those all-powerful individual citizens, who would brave the private insurance market armed with the latest outcomes and clinical research data. Mind you, he has no plans to end the current discrimination in that market against anyone who has actually been sick. Bemoaning the fact that the average family policy now costs $9,000 per year, Frist wants to come to the rescue by promoting health savings accounts as a panacea. It seems that paying a far lower premium but shelling out $5,000 to $10,000 from your pocket for these catastrophic policies is much more “empowering.”

Thomas’ ideas come wrapped in less interstellar prose, but the net effect is much the same. The chairman, who would lose his coveted post under House Republican rules in 2007, has his eye on the infernal payroll tax that funds Medicare and Social Security. The tax discourages hiring, Thomas says, and he hints at lowering it or scrapping it in favor of an income tax, either of which would lead to cuts in benefits or an increase in the retirement age. A less onerous method of trimming Medicare costs, of course, would be to allow HHS to negotiate prices for the new prescription-drug benefit with drug companies, but that is off the table. Apparently, the “ownership society” that conservatives love to talk about does not allow for such government interference, even in a marketplace the government itself established.

President Bush, meanwhile, still has Medicaid firmly in his rifle sights as he staves off the lame-duck label. His brother Jeb has proposed privatizing the program in Florida, handing poor beneficiaries a check they can use to brave the managed-care market, which I am sure will be thrilled to have them. The prez won’t go that far on a national basis, but he will try to cap spending on a program that has been rising in cost but at a significantly lower rate than overall health spending. His favorite buzzword here is “flexibility” for state programs, a word that for providers and patients translates roughly to “screwed.”

All these visions have me swooning, a state that many providers may be experiencing as well. I wonder if my employer-sponsored insurance plan covers this condition. If you have a health savings account, you may want to just lie down.

Study finds most pulled into debt by illness have jobs, health insurance(Associated Press)

By Mark Jewell, AP

BOSTON (Feb. 2) – Costly illnesses trigger about half of all personal bankruptcies, and most of those who go bankrupt because of medical problems have health insurance, according to findings from a Harvard University study to be released Wednesday.

Researchers from Harvard’s law and medical schools said the findings underscore the inadequacy of many private insurance plans that offer worst-case catastrophic coverage, but little financial security for less severe illnesses.

”Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy,” said Dr. David Himmelstein, the study’s lead author and an associate professor of medicine. ”Most of the medically bankrupt were average Americans who happened to get sick.”

The study, to be published online Wednesday by the journal Health Affairs, distributed questionnaires to 1,771 bankruptcy filers in 2001 in California, Illinois, Pennsylvania, Tennessee and Texas. That year, there were 1.46 million personal bankruptcies in the United States.

More than 900 of those questioned underwent more detailed interviews about their financial and medical circumstances for what the authors say is the first in-depth study of medical causes of personal bankruptcies, which have risen rapidly in recent years.

Illness and medical bills were cited as the cause, at least in part, for 46.2 percent of the personal bankruptcies in the study. Himmelstein said the figure rose to 54.5 percent when three other factors were counted as medical-related triggers for bankruptcies: births, deaths and pathological gambling addiction.

The study estimates medical-caused bankruptcies affect about 2 million Americans each year, counting debtors and their dependents, including 700,000 children.

Most of those seeking court protection from creditors had health insurance, with more than three-quarters reporting they had coverage at the start of the illness that triggered bankruptcy. The study said 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy, with illness frequently leading to the loss of both a job and insurance.

By the Numbers
2 million
Estimated number of people affected annually by medical bankruptcies
76 percent
Portion of medical bankruptcy filers in the Harvard study who had health insurance
$11,854
Average out-of-pocket costs for the illness that led to bankruptcy
Source: Reuters

Out-of-pocket medical expenses covering co-payments, deductibles and uncovered health services averaged $13,460 for bankruptcy filers who had private insurance at the onset of illness, compared with $10,893 for those without coverage. Those who initially had private coverage but lost it during their illness faced the highest cost, an average of $18,005.

”We need to rethink health reform,” said Dr. Steffie Woolhandler, a study co-author and associate professor of medicine at Cambridge-based Harvard. ”Covering the uninsured isn’t enough. We also must upgrade and guarantee continuous coverage for those who have insurance.”

Susan Pisano, a spokeswoman for America’s Health Insurance Plans, representing nearly 1,300 health insurance providers, said the study did not adequately explore the role that disability income protection plans and personal savings can play in helping someone with a medical problem avoid bankruptcy.

”It’s very important to ask questions about what the financial stressors are for American families, but we don’t think this study digs deeply enough,” Pisano said.

The findings indicate medical-related bankruptcies hit middle-class families hard – 56 percent of the filers owned a home, and the same number had attended college.

”Families with coverage faced unaffordable co-payments, deductibles and bills for uncovered items like physical therapy, psychiatric care and prescription drugs,” Himmelstein said.

The study, funded by the Robert Wood Johnson Foundation, did not examine how many bankruptcy filers were from dual-income families where both partners had insurance, Himmelstein said.

Jeff Morris, resident scholar at the American Bankruptcy Institute, founded by Congress in 1982 to analyze bankruptcy trends, said the Harvard findings roughly mirror those of a 1996 ABI study in which 57 percent of bankruptcy filers cited medical problems as a primary bankruptcy cause. Respondents in that study were more likely to cite three other factors as primary causes, including easy access to credit, job loss and financial mismanagement.

Morris said he was aware of no data indicating that the Harvard study, which was based on 2001 bankruptcy filings, does not accurately reflect current trends in medical-related bankruptcies.

”Medical coverage is becoming more for catastrophic loss than for intermediate expenses,” Morris said.

Study ties bankruptcy to medical bills(NY Times)

By Reed Abelson

Sometimes, all it takes is one bad fall for a working person with health insurance to be pushed into bankruptcy.

Hundreds of thousands of Americans file for personal bankruptcy each year because of medical bills – even though they have health insurance, according to a new study by Harvard University legal and medical researchers.

“It doesn’t take a medical catastrophe to create a financial catastrophe,” said Elizabeth Warren, a Harvard law professor who studies bankruptcy and is one of the authors of the study.

The study, which is scheduled to appear today on the Web site of Health Affairs, an academic journal, provides a glimpse into a little-researched area connecting bankruptcy and medical costs. About 30 percent of people said they filed for bankruptcy because of an illness or injury, even though most of them had health insurance when they first got sick.

Many lost their jobs – and their insurance – because they got sick, while others faced thousands of dollars in co-payments and deductibles and for services not covered by their insurance.

One person cited in the bankruptcy study, for example, broke a leg, missed a couple of months of work and then had $13,000 in unpaid medical bills, though his employer-based health plan had already paid for much of his care, Ms. Warren said.

Another respondent to the survey was able to pay for hospital stays for lung surgery and a heart attack but could not return to his old job. When he found a new job, he was denied coverage because of his pre-existing conditions, which continued to require costly medical care and contributed to his bankruptcy.

Policy analysts say these findings underscore the limitations of the nation’s current system of providing health insurance largely through employers. Some argue that even for those with insurance, benefits can be ephemeral.

“You can lose it because it’s tied to employment,” said Joseph Antos, a health policy researcher with the American Enterprise Institute, who said people were also at risk if their employers went out of business.

To understand the effect of illness or injury on bankruptcy, the researchers surveyed 1,771 people who filed for bankruptcy in 2001 and interviewed 931 of them. They discovered a complex web of factors leading to bankruptcy, particularly as illness caused people to lose their jobs or cut back the hours they worked just as they were facing high medical bills.

Many of those families, Ms. Warren said, then “endured a one-two punch.”

The researchers examined those who specifically reported that their bankruptcies were precipitated by financial burdens caused by medical illness. They also included in a broader category of medical-related bankruptcy people who had more than $1,000 in unpaid medical bills at the time of the bankruptcy filing or had mortgaged their home to pay those bills.

The researchers acknowledged that often there was no single reason why someone went bankrupt. “There’s definitely overlapping reasons,” said Steffie Woolhandler, an associate professor of medicine at Harvard and one of the authors of the report.

They also pointed to gaps in coverage that left people vulnerable to financial crisis – particularly when workers switched jobs or were temporarily unable to afford contributions to a health plan. The high cost of continuing coverage under Cobra, the federal rule that allows former employees to stay on health plans for a time if they pay the entire cost, “is a cruel joke to these people,” Ms. Warren said.

Even when people remain insured, the study also notes that many health plans have limits on certain kinds of coverage, like physical therapy or prescription drugs.

“If you’re sick enough long enough, you’re in deep trouble in our society,” said David Himmelstein, an associate professor of medicine at Harvard Medical School, another of the study’s authors.

While some policies do offer catastrophic coverage, which pays for care after costs reach a certain threshold, Dr. Himmelstein said that coverage “often kicks in after people are bankrupted” because they must incur high medical bills to qualify.

And employees, who often have little choice of plans and frequently do not understand the differences among plans, are increasingly offered policies with less and less coverage, some policy analysts say.

“There’s a race to the bottom in terms of what health insurance means today,” said Ron Pollack, the executive director of Families USA, a consumer advocacy group in Washington.

This area is ripe for additional research, said Uwe E. Reinhardt, a professor at Princeton University, who said that there had not been enough hard evidence about working Americans who became ill and then went broke. “We put together vignettes, but they are not powerful enough,” he said.

The findings also raise questions about the effect of asking employees to bear a greater share of health cost through higher co-payments and the like. Many employers are shifting the increasing cost of care onto their employees, arguing that that trend gives workers an incentive to make judicious use of health care. But the researchers say higher co-payments and deductibles may well exacerbate the problem of medical bankruptcies.

Cornelia Dean contributed reporting for this article.

Bankrupted by illness(Newsday)

Bankrupted by illness
Researchers find that medical problems contributed to about half of all 2001 filings in the United States
February 2, 2005

Medical problems and their financial fallout – such as job loss and inability to pay soaring health care bills – contributed to about half of all bankruptcies in the United States in 2001, Harvard researchers found.

Even people with medical insurance were not safe from financial ruin resulting from illness, the researchers wrote in an article posted this week on the Web site of the journal Health Affairs. In fact, most people bankrupted by illness did have health insurance, the researchers found.

Out-of-pocket medical costs averaged $13,460 for people who had private health insurance when they became ill, versus $10,893 for the uninsured, the researchers found. The highest costs, which averaged $18,005, were incurred by people who had private insurance when they first became ill, but later lost it. Cancer patients’ out-of-pocket costs averaged $35,878.

“I think the message is, in this country, no one’s safe, even if you’re solidly middle class and have insurance coverage,” said Dr. David Himmelstein, lead author of the study and a professor at Harvard Medical School. Some people had insurance, but gaps in coverage resulted in large bills, Himmelstein said. Others who were sick for long periods lost the jobs that provided health care coverage.

Himmelstein is a founder of Physicians for a National Health Program, which advocates national health insurance. Several local attorneys confirmed yesterday that in New York, medical problems often figure in a decision to declare bankruptcy. Researchers estimate that in New York State in 2004 there were 38,645 medical bankruptcies.

Medical problems contributed to bankruptcies in about 700,000 U.S. households in 2001, the Harvard researchers concluded from legal filings in five states – California, Illinois, Pennsylvania, Tennessee and Texas. They used that data and interviews with bankruptcy filers to determine the extent of the national problem.
Westbury attorney Andrew Thaler, a bankruptcy trustee in the Eastern District of New York, confirmed that “a lot of people are having to file bankruptcy because of medical reasons. Lots of times people with medical debts will have other debts as well.”

Bankruptcy Study(Kaiser Daily Health Policy Report)

Kaiser Daily Health Policy Report
Wednesday, February 02, 2005
Coverage & Access

Medical Conditions, Resulting Financial Issues Contributed to Half of Bankruptcies in 2001, Study Says

About half of bankruptcies filed in 2001 were because of medical bills, according to a study published Wednesday on the Health Affairs Web site, the Chicago Tribune reports (Rubin, Chicago Tribune, 2/2). For the study, researchers from Harvard Medical School and Harvard Law School surveyed 1,771 U.S. residents who filed for bankruptcy in 2001 and interviewed 931 of them (Abelson, New York Times, 2/2). People interviewed had cases involving injury or illness, unpaid medical bills of more than $1,000 in the two years prior to filing for bankruptcy, loss of two weeks of work because of illness or injury or mortgaging of a home to pay medical bills, the Los Angeles Times reports (Dickerson, Los Angeles Times, 2/2). According to the study, 46.2% of people reporting bankruptcy in 2001 cited illness and medical bills as the cause. The rate rose to 54.5% when births, deaths and gambling addictions were considered as factors, the AP/San Jose Mercury News reports (Jewell, AP/San Jose Mercury News, 2/2). The number of bankruptcies filed in the United States tripled between 1980 and 2001, to nearly 1.5 million couples and individuals. The number of medical-related bankruptcies increased twenty-threefold during that period, the study says (Los Angeles Times, 2/2).

More Findings

According to Steffie Woolhandler, one of the study authors and a doctor at Cambridge Hospital, 76% of people who had a medical-related bankruptcy had health insurance when they first became ill (Kowalczyk, Boston Globe, 2/2). According to the study, 38% of those who filed for bankruptcy lost their health coverage at least temporarily by the time they had declared bankruptcy (AP/San Jose Mercury News, 2/2). Most of those who filed for bankruptcy because of medical costs were middle-income homeowners, the study indicates (Los Angeles Times, 2/2). For people filing bankruptcy, out-of-pocket medical costs averaged $13,460 for those who had health insurance, compared with an average of $10,893 for the uninsured, the study says. The highest costs — $18,005 on average — were incurred by people who had private health coverage at the beginning of their illness but later lost it, according to the study. For patients with cancer, average out-of-pocket costs were $35,878, the study finds (Kerr, Long Island Newsday, 2/2). The study also says that employer-sponsored health insurance does not seem to shield families from high medical costs because an illness can lead to job loss and loss of health coverage, the Los Angeles Times reports. In addition, people who cited medical bills as a cause for filing bankruptcy were more likely than others to have experienced a gap in health coverage because of costs or because they switched to a new plan and then lost coverage because of pre-existing medical conditions, the study says. In addition, about 33% of those who filed for bankruptcy because of medical costs said they still have difficulty paying bills, such as mortgages, utilities and rent (Los Angeles Times, 2/2).

Researchers’ Reaction

Elizabeth Warren, a Harvard law professor and one of the study’s authors, said, “It doesn’t take a medical catastrophe to create a financial catastrophe” (New York Times, 2/2). Woolhandler said, “A larger share of American workers are going to have insurance that’s like a paper umbrella. It looks good, and it might even protect you in a sprinkle, but it melts away in a downpour” (Rackl, Chicago Sun-Times, 2/2). David Himmelstein, another author and Harvard Medical School professor, said, “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who just happened to get sick. Health insurance offered little protection” (Rapaport, Sacramento Bee, 2/2). Warren said, “These are hard-working, ‘play-by-the-rules’ people who have health insurance and have discovered that they were just one bad diagnosis away from financial catastrophe. I think that’s the real heart of the story. This is about people who thought they were all safe” (Los Angeles Times, 2/2). Woolhandler said, “We need to rethink health reform. Covering the uninsured is not enough. We also must upgrade and guarantee continuous coverage for those who have insurance” (AP/San Jose Mercury News, 2/2). The Tribune reports that Himmelstein and Woolhandler, who are married, are co-founders of Physicians for a National Health Program, a group that advocates a national health insurance system (Chicago Tribune, 2/2).

Other Reaction

Some health policy analysts said they believe the findings highlight the “limitations” of the employer-based health insurance system, according to the New York Times. For instance, as employers shift more health care costs to workers, increasing copayments and deductibles could exacerbate the problem of medical-related bankruptcies, the Times reports. Joseph Antos, a health policy researcher with the American Enterprise Institute, said, “You can lose [health insurance] because it’s tied to employment” (New York Times, 2/2). Attorney Andrew Thaler, a bankruptcy trustee in New York, said that “a lot of people are having to file bankruptcy because of medical reasons. Lots of times people with medical debts will have other debts as well” (Long Island Newsday, 2/2). Greg Scandlen, director of the Galen Institute, said, “I don’t doubt there are people who lose their jobs due to a medical problem and hence lose their income and insurance. But this ‘study’ tells us absolutely nothing about those people because it is trying so hard to exaggerate the problem” (Chicago Tribune, 2/2).
The study is available online.

Middle-Class Workers With Health Coverage Represent Most Medical Bankruptcies In America(Health Affairs)

EMBARGOED for release
Wednesday, Feb. 2, 2005, 12:01 a.m. EST

Contact: Jon Gardner
jgardner@projecthope.org
301-347-3930

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.

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