PNHP

Medical bankruptcies increasing

Medical bankruptcies increasing

Medical Bankruptcy in the United States, 2007: Results of a National Study

By David U. Himmelstein, MD, Deborah Thorne, PhD, Elizabeth Warren, JD, Steffie Woolhandler, MD, MPH
The American Journal of Medicine
June 4, 2009

Abstract

Background: Our 2001 study in 5 states found that medical problems contributed to at least 46.2% of all bankruptcies. Since then, health costs and the numbers of un- and underinsured have increased, and bankruptcy laws have tightened.

Methods: We surveyed a random national sample of 2314 bankruptcy filers in 2007, abstracted their court records, and interviewed 1032 of them. We designated bankruptcies as “medical” based on debtors’ stated reasons for filing, income loss due to illness, and the magnitude of their medical debts.

Results: Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributed to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.

Conclusions: Illness and medical bills contribute to a large and increasing share of US bankruptcies.

Medical impoverishment, although common in poor nations, is almost unheard of in wealthy countries other than the US. Most provide a stronger safety net of disability income support. All have some form of national health insurance.

The US health care financing system is broken, and not only for the poor and uninsured. Middle-class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.

https://pnhp.org/new_bankruptcy_study/Bankruptcy-2009.pdf

Comment:

By Don McCanne, MD

In the United States, medical bankruptcy is very real, it is common, and it impacts primarily the insured middle class. And Congress is going to fix it with more of the same broken financing system?

Medical bills underlie 60 percent of U.S. bankruptcies: study

By Maggie Fox
Health and Science Editor
Reuters
Thu Jun 4, 2009

WASHINGTON (Reuters) – Medical bills are involved in more than 60 percent of U.S. personal bankruptcies, an increase of 50 percent in just six years, U.S. researchers reported on Thursday.

More than 75 percent of these bankrupt families had health insurance but still were overwhelmed by their medical debts, the team at Harvard Law School, Harvard Medical School and Ohio University reported in the American Journal of Medicine.

“Using a conservative definition, 62.1 percent of all bankruptcies in 2007 were medical; 92 percent of these medical debtors had medical debts over $5,000, or 10 percent of pretax family income,” the researchers wrote.

“Most medical debtors were well-educated, owned homes and had middle-class occupations.”

The researchers, whose work was paid for by the Robert Wood Johnson Foundation, said the share of bankruptcies that could be blamed on medical problems rose by 50 percent from 2001 to 2007.

“Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy,” Harvard’s Dr. David Himmelstein, an advocate for a single-payer health insurance program for the United States, said in a statement.

“For middle-class Americans, health insurance offers little protection,” he added.

The United States is embarking on an overhaul of its healthcare system, which is now a patchwork of public programs such as Medicare and employer-sponsored health insurance that leaves 15 percent of the population — 46 million people — with no coverage.

About 170 million people get health insurance through an employer but President Barack Obama says soaring healthcare costs are hurting the economy and forcing businesses to drop medical insurance for their workers.

CANCELED COVERAGE

“Nationally, a quarter of firms cancel coverage immediately when an employee suffers a disabling illness; another quarter do so within a year,” the report reads.

Obama told Congress on Wednesday he was open to making mandatory health insurance part of the overhaul but only with exemptions for the poor and for small businesses.

Neither Congress nor Obama are considering the kind of single-payer plan advocated by Himmelstein and his colleague Dr. Steffie Woolhandler.

“We need to rethink health reform,” Woolhandler said. “Covering the uninsured isn’t enough.

“Only single-payer national health insurance can make universal, comprehensive coverage affordable by saving the hundreds of billions we now waste on insurance overhead and bureaucracy.”

The researchers surveyed 2,134 random families who filed for bankruptcy between January and April in 2007, before the current recession began.

They used public bankruptcy court records and survey 1,032 respondents by telephone.

While only 29 percent directly blamed medical bills for their bankruptcy, 62 percent had medical bills that totaled more than 10 percent of family income, said an illness was responsible, had lost income due to illness or some other medical factor.

“Among common diagnoses, nonstroke neurologic illnesses such as multiple sclerosis were associated with the highest out-of-pocket expenditures (mean $34,167), followed by diabetes ($26,971), injuries ($25,096), stroke ($23,380), mental illnesses ($23,178), and heart disease ($21,955),” the researchers wrote.

(Editing by Bill Trott)

Medical bills play a role in 62% of bankruptcies, study says

By Lisa Girion
Los Angeles Times
June 4, 2009

President Obama’s push for healthcare reforms gets a boost today from a new study by Harvard University researchers that shows a sizable increase over six years in bankruptcies caused in part by ever-higher medical expenses.

The study found that medical bills, plus related problems such as lost wages for the ill and their caregivers, contributed to 62% of all bankruptcies filed in 2007. On the campaign trail last year and in the White House this year, Obama had cited an earlier study by the same authors showing that such expenses played a part in 55% of bankruptcies in 2001.

Medical insurance isn’t much help, either. About 78% of bankruptcy filers burdened by healthcare expenses were insured, according to the survey, to be published in the August issue of the American Journal of Medicine.

“Health insurance is not a guarantee that illness won’t bankrupt you,” said Steffie Woolhandler, one of the authors, a practicing physician and an associate medical professor at Harvard.

“Lots of health insurance comes with big co-payments, deductibles and uncovered services,” she said. “So you can be insured and still end up with big bills. At the same time, even if you have good insurance through your employer, you can lose it if you get sick and can’t work.”

Most people who filed medical-related bankruptcies “were solidly middle class before financial disaster hit,” the study says. Two-thirds were homeowners, and most had gone to college.

The study does not suggest that medical expenses were the sole cause for these bankruptcies, but it does identify them as a contributing factor. The increase in such filings occurred despite a 2005 law aimed at making it more difficult for individuals to seek court protection from creditors.

And the latest study probably understates the current burden of medical expenses because it is based on bankruptcies filed before the recession hit.

The findings by a team of Harvard researchers from the law and medical schools are expected to help fuel the debate over what type of healthcare system is right for the U.S.

In a letter Wednesday, Obama made another push for a healthcare overhaul, reiterating his concern about the financial burden the current system places on families and businesses.

“Soaring healthcare costs make our current course unsustainable,” he wrote in the letter to Sens. Edward M. Kennedy (D-Mass.) and Max Baucus (D-Mont.), who are leading efforts to develop healthcare legislation. “It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need.”

Momentum has been growing in Congress for healthcare reform. Such change can’t come soon enough for Mary McCurnin.

She and her husband, Ron, filed for bankruptcy and nearly lost their home near Sacramento after a series of medical crises, including her breast cancer and his open-heart surgery. Ron, 63, lost his insurance coverage when the company providing it lost its California license after paying 10% of his hospital bills. Mary, 59, managed to get on Medi-Cal after they “went broke.”

Despite the ordeal, she said, the self-employed illustrators feel fortunate that they survived and managed to hang on to their home. “The healthcare industry is killing people,” she said. “There’s no other way to put it. We just got lucky.”

Linda and Jeffrey Somach pay $800 a month for health insurance. But the Staten Island, N.Y., couple filed for bankruptcy a month ago when their out-of-pocket medical expenses surpassed $40,000.

Linda Somach, a psychologist, can earn $80,000 a year if she sees patients full time. But she had to scale back to care for Jeffrey, who has terminal brain cancer. That reduced their income. At the same time, she is constantly getting bills for out-of-network charges, deductibles and medical care that their insurance doesn’t cover.

“We put so much of the medical stuff on credit cards,” she said. “My patients do it too.”

The study suggests that such plights are routine.

Woolhandler is on the board of Physicians for a National Health Program, a group that advocates for a single-payer system, in which government, not private insurers, brokers healthcare. She said the study showed that private insurers had failed in their core mission: protecting consumers from financial ruin in the event of a medical crisis.

“We need to rethink health reform,” Woolhandler said. “Covering the uninsured isn’t enough. Reform also needs to help families who already have insurance by upgrading their coverage and assuring they never lose it.”

A spokesman for private insurers said the industry recognized that uncovered and expensive medical care imposed a burden on families and businesses. But he said that private insurers were in a better position to rein in spiraling medical costs and that the industry had a plan for protecting people from being forced into bankruptcy over medical expenses not covered by insurance.

“In fact, in our comprehensive reform proposal we recommended in December that Congress should look at an out-of-pocket spending cap and a system of tax credits for low-income people,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, a Washington, D.C.-based trade group.

“If an individual’s health expenses reached a certain level, there could be tax credits or other assistance to help those individuals,” he said.

The study found that medical-related bankruptcy filers with private insurance reported average medical bills of $17,749. By comparison, people who filed for bankruptcy without insurance reported average medical expenses of $26,971.

Individuals with diabetes and neurological disorders, such as multiple sclerosis, had the highest medical bills, averaging $26,971 for those with insurance and $34,167 for those without. Hospital bills were the largest expense for about half the families that filed health-related bankruptcies.

Grass-roots groups must test President mettle on health care reform

By Errol Lewis
New York Daily News
Thursday, June 4th 2009, 4:00 AM

WASHINGTON – As the White House launches its bid to reform health care, the big questions bedeviling the activist base of the Democratic Party are how and when to nudge President Obama to the left on key issues.

The recent three-day conference of the Campaign for America’s Future – an amalgamation of hundreds of unions, advocacy groups, student organizations, liberal think tanks and anti-war organizations whose turnout helped elect Democrats from coast to coast – featured a vow to get behind Obama’s push to reform health care this year.

But the frenetic energy of last year’s conference and about 500 attendees were missing. So was a hoped-for cameo appearance by Obama, who as a candidate dazzled the crowd at past conferences.

Many progressives have concluded correctly that Obama’s penchant for compromise and consensus could lead to a complex, unworkable, hybrid public-private health care proposal that will be an easy target for pharmaceutical industry lobbyists and other entrenched interests to demonize, weaken and possibly kill.

The stakes could not be higher. Tens of millions of Americans lack coverage, and the cost of health care continues to soar by double-digit percentages, causing an estimated half of all personal bankruptcies.

Although polls suggest that a thin majority of Americans would support a single, Medicare-style health insurance plan that covers everybody, Obama is playing it safe politically by going for a hybrid proposal in which those who are happy with their current coverage could keep it without any changes. That option, according to the polls, brings public support to 77%.

That leaves single-payer supporters in the tricky position of wanting to put pressure on Obama without providing ammunition to his (and their) conservative adversaries.

There’s a fine art, and long history, of Presidents being pressured by the social movements that helped elect them. “Obama’s Challenge,” a book making the rounds in progressive circles for months, describes how movement pressure made Abraham Lincoln, Franklin Roosevelt, Lyndon Johnson and Ronald Reagan into great, transformational Presidents.

According to this reading of history, the abolitionists pushed Lincoln from the goal of saving the union to the more radical move of ending slavery. Labor activism moved FDR from halting the Depression to enacting the New Deal, and civil rights activism forced Johnson to pass the Civil Rights Act of 1964 and Voting Rights Act of 1965, breaking the back of legalized segregation.

Presidents need outside grass-roots heat to help move the national consensus. The dreaded scenario for progressives is the arm’s-length treatment the anti-abortion movement got from Reagan.

Every year, the anti-abortion forces would gather on the National Mall, and every year Reagan would address them via a phone link and promise action on a constitutional amendment to ban abortion that never got to first base.

“We’ve seen little evidence of a progressive movement that can challenge the limits of Obama’s agenda and rouse an aggrieved citizenry to open up the space for the President to act far more boldly,” is how Robert Borosage, co-director of the Campaign for America’s Future, put it in a recent blog post. “But anyone building that movement will have to understand that they might earn respect, but they won’t be loved in the White House.”

The question is whether progressive health care advocates want to make friends with Obama, or make history. We shall see.

Study: Most Personal Bankruptcies Caused By Medical Bills, Illness

By DIANE LEVICK
The Hartford Courant
June 4, 2009

Medical bills or illness contributed to more than 62 percent of personal bankruptcies in 2007, a new study says, showing a nearly 50 percent increase from 2001 and not even reflecting the growing number of people who are losing their jobs and insurance in the recession.

The national study by researchers at Harvard University and Ohio University follows their five-state 2005 study that found medical problems contributed to at least 46.2 percent of bankruptcies in 2001. When identical definitions are applied, the share of bankruptcies involving medical issues has risen 49.6 percent since then.

“The U.S. health care financing system is broken, and not only for the poor and uninsured,” said the new report, which will appear in the August issue of the American Journal of Medicine and online today. “Middle class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.”

Medical bankruptcies will total an estimated 866,000 this year and involve 2.3 million Americans, based on the current bankruptcy filing rate, the report says.

Most medically bankrupt families were middle class. About 60 percent attended college and more than 66 percent owned a home.

Out-of-pocket medical expenses averaged $17,943 for medically bankrupt families — $26,971 for uninsured patients and $17,749 for those who had private insurance — at least initially. Some lose coverage when they became too sick to work, the report says.

The researchers voiced disdain for private insurance and support for a single-payer national health insurance system.

“Private health insurance is a defective product, akin to an umbrella that melts in the rain,” said lead author Dr. David Himmelstein, associate professor of medicine at Harvard. “Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy.”

The study surveyed a random national sample of 2,314 bankruptcy filers in 2007, examined their court records, and interviewed 1,032 of them.

The research was done by researchers at Harvard Law School, Harvard Medical School and Ohio University, and supported by a grant from the Robert Wood Johnson Foundation.

http://www.courant.com/business/hc-bankruptcies-medical-bills-study-0604,0,6923001.story

How Much Do Life Insurers Profit from Tobacco?

By Kathleen Kingsbury
Time Magazine
Thursday, Jun. 04, 2009

In an era of corporate wellness programs and socially screened investment funds, some of the world’s largest life-insurance companies still own billions of dollars in tobacco-industry stocks, Harvard physicians assert in a new report.

These latest findings, published this week in a letter to the New England Journal of Medicine (NEJM), suggest that several life and disability insurers, both in the U.S. and abroad, have yet to acquiesce to calls from the American Medical Association and others to divest their holdings in companies such as Reynolds American, Lorillard and Philip Morris. Many insurers cited in the letter say the study wildly overstates their investments, but the authors disagree. “Insurers continue to put their profits above people’s health,” said Dr. J. Wesley Boyd, the lead author of the report. “It’s clear their top priority is making money, not safeguarding people’s well-being.” (See pictures of vintage cigarette ads touting their “healthiness.”)

It can be argued, of course, that life- and disability-insurance companies have everything to gain from customers who live long and healthy lives — and continue to pay their premiums. So it would not be in the insurers’ interest to support tobacco use. But the authors argue that in fact, insurers profit both ways. “Although investing in tobacco while selling life or health insurance may seem self-defeating,” the authors write, “insurance firms have figured out ways to profit from both. Insurers exclude smokers or, more commonly, charge them higher premiums. Insurers profit — and smokers lose — twice over.”

The new study is a follow-up to a similar one conducted in 1995. For the new report, Boyd and his Harvard colleagues used a proprietary database called Osiris, which updates its financial data daily, to cull information on the major shareholders of tobacco-related equities. The researchers cite New Jersey–based insurer Prudential Financial as a typical example of what they discovered. Prudential, which sells both life and long-term-disability insurance, owned about $264 million in the stocks of Reynolds American, which makes Camel cigarettes, and Philip Morris International, which manufactures the Marlboro brand.

A Prudential spokesperson acknowledged that this figure is “reasonably accurate.” But other insurers named in the study strongly dispute its claims. The NEJM letter states that, for instance, Canadian firm Sun Life Financial, which offers life, health and disability insurance, holds just over $1 billion in tobacco investments. In an e-mail to TIME, however, Sun Life spokesman Michel Leduc called this number “categorically incorrect.” Although he would not disclose specific holdings, Leduc said that of the company’s $100 billion investment portfolio, less than 0.005% was exposure to tobacco stocks. “Sun Life’s investments in renewable-energy projects are over $1.2 billion. We also invested about $1 billion in the last three years to help build or renovate about 20 hospitals and long-term-care facilities,” Leduc added. “Together, these two categories alone amount to nearly 500 times the size of tobacco stocks.”

Two other U.S.-based insurers, Northwestern Mutual and MassMutual, also question the study’s data. The NEJM letter places Milwaukee-based Northwestern’s tobacco-stock holdings at $235 million in Reynolds, Philip Morris and Lorillard, which produces Newport cigarettes. But spokeswoman Jean Towell says the insurer’s investments are actually one-tenth that figure, less than $24 million.

At MassMutual, the gap is even bigger. The study claims the firm’s tobacco holdings to be $585 million. That is “absolutely incorrect,” says Mark Cybulski, a MassMutual spokesman. “Massachusetts Mutual Life Insurance Company has virtually no equity holdings in companies whose offerings include tobacco-related products. As of December 31, 2008, MassMutual’s holdings of tobacco-related equities are approximately $548,000, representing less than 0.001% of consolidated statutory cash and invested assets of $86.2 billion.”

Such discrepancies are hard to explain. The Harvard researchers’ data, gathered from the Osiris database, was reviewed by both NEJM and TIME and found to be accurate as of March 26, 2009. Osiris, for its part, collects financial information from yet another financial database, FactSet Research Systems, which sources its records directly from public filings by the tobacco firms and the insurers to the Security and Exchange Commission. “I think the numbers in the Osiris database are aggregate numbers from every division of a company like Northwestern, whereas Northwestern might be looking at a subset of their total holdings,” Boyd says. Similar questions arose from his 1995 findings, which were ultimately substantiated.

All the insurers in question also sell mutual funds and other retirement products alongside their insurance businesses. That means at least some of their exposure to tobacco stocks stems from client assets in index funds, such as those pegged to the S&P 500, which, of course, includes firms like Philip Morris and Lorillard. Many of the insurers contacted by TIME declined to outline the specifics of their investment portfolios, but a Prudential spokesman, Darrell Oliver, noted that as a policy, Prudential does not invest in tobacco stocks for its own portfolios: “Some Prudential entities hold tobacco stocks. Those stocks are primarily part of index-related strategies managed for separate accounts or other portfolios managed for third parties.”

Another life insurer, TIAA-CREF, the largest U.S. education retirement fund, has long been criticized for its billion-dollar investments in tobacco stocks. It now allows clients to opt to avoid such equities through special socially conscious funds. This is an option nearly all insurers now include in their portfolios. “As a TIAA-CREF participant, you do not have to own shares in tobacco companies if you choose not to,” says spokesman Chad Peterson.

Purely from an investor’s standpoint, however, buying tobacco stocks is a solid long-term bet that historically pays regular dividends. “We ultimately have a fiduciary responsibility to our clients,” says Towell, who puts about 5% of Northwestern’s tobacco equities in index funds.

Yet that profit-making duty is what troubles the Harvard doctors. Boyd and his colleagues believe that their findings call into question whether insurers ought to have a voice in the ongoing debate in Washington over health-care reform. “These data raise a red flag about the prospects of opening up vast new markets for private insurers at public expense, as has happened in our state of Massachusetts, an oft-cited model for national health reform,” the researchers write in their NEJM letter.

The health-insurance industry, by contrast, has largely divested tobacco holdings since the 1990s and has offered to compromise with lawmakers in the health-care debate. In a letter to Congress on March 24, several health insurers indicated they would be willing to stop charging higher premiums to people with a history of medical problems if all Americans were required to purchase health plans. Perhaps the next step will be for life and disability insurers to look at their tobacco stocks and, as they say, kick the habit.

Life, health insurers invest big in tobacco

Agence France-Presse (AFP)
June 4, 2009

WASHINGTON (AFP) — Major US, Canadian and British life and health insurance companies have billions of dollars invested in tobacco companies, a study published Wednesday in the New England Journal of Medicine said.

Wesley Boyd, the study’s lead author, found that at least 4.4 billion dollars in insurance company funds are invested in companies whose affiliates produce cigarettes, cigars and chewing tobacco.

“Despite calls upon the insurance industry to get out of the tobacco business by physicians and others, insurers continue to put their profits above people’s health,” said Boyd, a faculty member of Harvard Medical School.

“It’s clear their top priority is making money, not safeguarding people’s well-being,” he wrote.

Tobacco is considered the leading cause of lung cancer and a major risk factor for heart attack, stroke, pulmonary disease and cancer.

According to the World Health Organization, it is a contributing factor in 5.4 million deaths a year.

Researchers first revealed that health and life insurance companies had major investments in tobacco companies in 1995 in an article in the British medical journal Lancet.

“Although investing in tobacco while selling life or health insurance may seem self-defeating, insurance firms have figured out ways to profit from both,” Boyd wrote.

“Insurers exclude smokers from coverage or, more commonly, charge them higher premiums. Insurers profit — and smokers lose — twice over.”

According to the study, US insurer Prudential Financial Inc. has 264.3 million dollars invested among three US tobacco companies, including Reynolds America and Philip Morris.

Canadian insurer Sun Life Financial Inc., which sells life, disability and health insurance, has a stock portfolio with more than one billion dollars in two tobacco companies, including 890 million dollars in Philip Morris.

Prudential Plc, which sells health and disability insurance, has 1.38 billion dollars in two tobacco companies, including British American Tobacco.

The study also details the substantial tobacco investments of the US firms Northwestern Mutual and Massachusetts Mutual Life, and the Scottish firm Standard Life Plc.

Charity care not answer, doctor says

Judy Dasovich says reformed system wouldn't be socialist

Mike Penprase
News-Leader (Springfield, MO)
May 31, 2009

Dr. Judy Dasovich got national attention with her arrest during a recent Senate hearing in Washington, but she was more intent at a Saturday rally on getting attention paid to others.

Go talk to the family who had a mountain of medical bills that wasn’t covered by their insurance, the volunteer physician at The Kitchen told reporters during a “High Noon for National Health Care” rally.

The rally might have been impromptu and involved fewer than two dozen people, but Dasovich said she was pleased.

“We started organizing this in the middle of the week,” she said.

The Physicians for a National Health Program that Dasovich belongs to and other groups have advocated adoption of a single-payer or Medicare-for-all system, but Dasovich said she tells the curious there’s a simpler explanation.

Americans should pay for health insurance like they pay for interstate highways, she said.

Money that now goes for insurance premiums and co-payments should go to a nationwide tax that would support a health insurance system, she contends.

Instead of health insurance premiums going to insurance company profits and outright waste, the money would go for treating people, she said.

Dasovich said critics who contend such a system would be socialized medicine are mistaken because reform she wants to see would change the way money is spent and wouldn’t affect how doctors treat patients or how patients select doctors.

Anyone who has fought an insurance company over a bill or who has been forced to move from one physician to another because an employer changed health care coverage would understand, she said.

Her stance — and her trip to Washington that resulted in a misdemeanor arrest — didn’t come after one case of seeing someone needing health care who didn’t have insurance, she said.

Along with several other health insurance reform advocates, Dasovich was held for several hours after they demonstrated during a session of the Senate Finance Committee headed by Sen. Max Baucus.

“Charity care is not a solution,” she said. “I’ve seen that firsthand. This is the next step that needs to be taken.”

People attending the rally said they appreciate Dasovich’s commitment to reform.

“She’s wonderful,” Vicki Chapman said while holding baby daughter Kylie. “Judy is Kylie’s hero.”

As for her Washington arrest, Dasovich said she’s ready to deal with that soon.

Dasovich said she’s scheduled to return to Washington to respond the misdemeanor charge next week and expects a hearing to be held in another month.

Study Links Medical Costs and Personal Bankruptcy

Harvard researchers say 62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems--and 78% of those filers had insurance

By Catherine Arnst
BusinessWeek
June 4, 2009

Medical problems caused 62% of all personal bankruptcies filed in the U.S. in 2007, according to a study by Harvard researchers. And in a finding that surprised even the researchers, 78% of those filers had medical insurance at the start of their illness, including 60.3% who had private coverage, not Medicare or Medicaid.

Medically related bankruptcies have been rising steadily for decades. In 1981, only 8% of families filing for bankruptcy cited a serious medical problem as the reason, while a 2001 study of bankruptcies in five states by the same researchers found that illness or medical bills contributed to 50% of all filings. This newest, nationwide study, conducted before the start of the current recession by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a sociology professor at Ohio University, found that the filers were for the most part solidly middle class before medical disaster hit. Two-thirds owned their home and three-fifths had gone to college.

But medically bankrupt families with private insurance reported average out-of pocket medical bills of $17,749, while the uninsured’s bills averaged $26,971. Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658. “For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments, and deductibles that illness can put you in the poorhouse,” said lead author Himmelstein. “Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy.”

The study underscores President Barack Obama’s arguments in calling for health-care reform legislation this year. In a letter to Democratic Senate leaders this week, the President said: “Health-care reform is not a luxury. It’s a necessity we cannot defer. Soaring health-care costs make our current course unsustainable. It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need.”

Highest Costs for Diabetes, Neurological Illness

The study was funded by the Robert Wood Johnson Foundation and published online June 4 by the American Journal of Medicine. It will appear in the Journal’s August print edition. The researchers examined the court records of a random sample of 2,314 bankruptcy filings across the nation during early 2007, and also contacted those filers for written explanations. The researchers then followed up with extensive phone interviews of 1,032 of those filers.

They found that a number of medical factors contributed to a family’s financial disaster. More than 90% of medically related bankruptcies were caused by high medical bills directly or medical costs that were so high the family was forced to mortgage their home. The remaining 8% went bankrupt because a medical problem caused them to lose income. The authors were not able to track credit-card defaults caused by medical bills, but a 2007 study found that, of low- and middle-income households with credit-card debt, 29% used their plastic to pay off medical expenses.

Individuals with diabetes, one of the most common chronic diseases in the U.S., and those with neurological illnesses such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167, respectively. Hospital bills were the largest single expense for half of all medically bankrupt families.

Dr. Woolhandler, an advocate of a single-payer health-care system, said lawmakers in Washington should reconsider health-care reform in light of the study. “Covering the uninsured isn’t enough,” she said. “Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it.”

Arnst is a senior writer for BusinessWeek based in New York.

Democrats Start With Compromise on Health Care Reform

Michele Swenson
Huffington Post
Posted: June 3, 2009

Democrats at the fore of shaping health care reform policy concede the issue from the start by failing to put forth the best possible case for reform. Instead, they have begun the discussion with compromise.

Even as Democrats fail to frame the issue, the failed U.S. multipayer health insurance industry that siphons hundreds of billions of health care dollars to profit and administrative costs is at the center of health reform discussion, defining the terms of the debate.

Inclusion of the one reform model — single payer — that could save $400 billion annually, restore the U.S. primary care infrastructure and provide the health care that everyone needs, has been declared off the table.

When Gov. Howard Dean appeared in Denver last week to promote a parallel public health option, he elicited audible groans from his progressive audience when he rhetorically asked, wasn’t Medicare Part D a “good” reform for seniors? The 2003 reform was good for the corporate lobbies, but not so much for those trapped in the doughnut hole, or in plans with changing formularies, or forced to pay premium prices for medications because Medicare is prohibited from negotiating bulk drug rates. Nor is it a bargain for taxpayers, forced to subsidize for-profit insurances at higher cost.

Perhaps indicative of the insularity of Washington, there exists a real disconnect between many in the Capitol (whose health coverage is largely subsidized by taxpayers) and those in the hinterland. Medicare prescription drug reform should be reformed, and it doesn’t deserve to be a model for reform in 2009.

Senate Finance Committee chair Sen. Max Baucus declared Single-Payer health care “the only thing that’s not on the table because it cannot pass,” thus perpetuating self-fulfilling prophecy and the continued suppression of full debate around the single payer model of health care reform. The adjective “politically unfeasible” speaks more to the lack of political will of legislators to frame the debate, instead conceding the issue to the monied lobbies. Doctors and others who protested the exclusion of single payer model from the dialogue have been brought up on charges by Sen. Baucus.

Even a parallel public plan option is marginalized by some Democrats, including Sen. Baucus, as a “fallback option.” Baucus has indicated that a public option might merely serve as a bargaining chip to nudge the health insurance industry into “less disruptive” market-based reforms. Still on the table, he has said the public plan “might be a bit on the side of the table.”

Sen. Schumer proposes a watered down public plan, reducing it to just one more private insurance. Sen. Ted Kennedy has made the strongest statement for a public plan: “Americans want the choice of enrolling in a health insurance program backed by the government for the public good, not private profit.” If Democrats seriously want to end up with a true parallel public plan — vs. a publicly subsidized private plan — it is a simple rule of negotiation that you don’t start with your compromise position.

If ever there was a time for systemic reform, now is the time for our leaders to make the most compelling case for comprehensive health care access with huge dollar savings in the face of devastating economic crisis and its ripple effects — rampant job layoffs with lost health coverage, escalating mortgage foreclosures, and failing auto and other U.S. industries.

Republican think tanks and cultural warriors understand the principle of negotiation — over four decades they have advanced the most extreme right-wing positions in every area in order to push every political outcome far to the right.

Reminiscent of “Harry and Louise” fearmongering in the ’90s, the corporate lobby invokes the single payer bogeyman and short circuits debate with corrupted language around “choice,” “competition” and “rationing,” even though rationing is the norm within the current multi-payer health insurance bureacracy.

This year’s poster child for beleaguered health insurance CEOs is disgraced former Colombia/HCA hospital CEO and multimillionaire Rick Scott, who in the name of “Conservatives for Patient Rights” is promoting “free market” notions of “choice” and “competition.” Ironically, only the single payer health care model offers full choice of providers and competition based on quality of care.

U.S. primary care infrastructure has been decimated by the burden of insurance paperwork. Wrote a family physician of 47 years, “Health care insurers are more bureaucratic than any government agency. They often deny choice of doctor, and refuse to pay for care.” Furthermore, the bureaucracy is exponentially multiplied as each insurer has a different set of rules.

The shortage of primary care providers is pushing not only the uninsured, but also the insured, into ERs. Sen. Patrick Leahy (D-VT) recently noted that too many insured Vermonters go to the emergency room for everyday health care needs, due to a lack of primary care physicians to handle demand for services.

Massachusetts reform has also crashed upon the shoals of reality. Even as more are insured, growing numbers of insured report they cannot afford needed treatment. In Massachusetts also, the shortage of primary care physicians drives the insured into emergency rooms for non-emergency care. Authors of an annual Massachusetts health care survey cite a lack of cost controls that have significantly compromised health care. A Massachusetts commission is reportedly drafting a system of global payments to networks of doctors, hospitals and other providers — operating as a single payer model would. The goal is to incentivize keeping patients healthy, instead of paying by numbers of procedures, thus incentivizing unnecessary treatment.

Thus far Democratic leaders have conceded the framing of health care reform debate to Republican corporate interests seeking to maintain their profit advantage. For-profit primary health insurances are forbidden in most industrialized nations because they compromise health care access, primary care infrastructure and quality of care.

If Democrats want to end up with a true public plan option or any meaningful reform, they should lead with the best model, making the best case for reform. The question has to be asked: “What are we insuring — health care access or the bottom line?”

Illness, medical bills linked to nearly two-thirds of bankruptcies: Harvard study

Harvard study finds 50 percent increase from 2001

Most of those bankrupted by illness were middle class and had insurance

EMBARGOED until:
June 4, 2009, 12:01 a.m. EDT

Contacts:
David Himmelstein, M.D.
Steffie Woolhandler, M.D., M.P.H.
Elizabeth Warren, J.D.
Deborah Thorne, Ph.D.
Mark Almberg, (312) 782-6006, cell: (312) 622-0996, mark@pnhp.org

Medical problems contributed to nearly two-thirds (62.1 percent) of all bankruptcies in 2007, according to a study in the August issue of the American Journal of Medicine that will be published online Thursday. The data were collected prior to the current economic downturn and hence likely understate the current burden of financial suffering. Between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by 49.6 percent. The authors’ previous 2001 findings have been widely cited by policy leaders, including President Obama.

Surprisingly, most of those bankrupted by medical problems had health insurance. More than three-quarters (77.9 percent) were insured at the start of the bankrupting illness, including 60.3 percent who had private coverage. Most of the medically bankrupt were solidly middle class before financial disaster hit. Two-thirds were homeowners and three-fifths had gone to college. In many cases, high medical bills coincided with a loss of income as illness forced breadwinners to lose time from work. Often illness led to job loss, and with it the loss of health insurance.

Even apparently well-insured families often faced high out-of-pocket medical costs for co-payments, deductibles and uncovered services. Medically bankrupt families with private insurance reported medical bills that averaged $17,749 vs. $26,971 for the uninsured. High costs – averaging $22,568 – were incurred by those who initially had private coverage but lost it in the course of their illness.

Individuals with diabetes and those with neurological disorders such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167 respectively. Hospital bills were the largest single expense for about half of all medically bankrupt families; prescription drugs were the largest expense for 18.6 percent.

The research, carried out jointly by researchers at Harvard Law School, Harvard Medical School and Ohio University, is the first nationwide study on medical causes of bankruptcy. The researchers surveyed a random sample of 2,314 bankruptcy filers during early 2007 and examined their bankruptcy court records. In addition, they conducted extensive telephone interviews with 1,032 of these bankruptcy filers.

Their 2001 study, which was published in 2005, surveyed debtors in only five states. In the current study, findings for those five states closely mirrored the national trends.

Subsequent to the 2001 study, Congress made it harder to file for bankruptcy, causing a sharp drop in filings. However, personal bankruptcy filings have soared as the economy has soured and are now back to the 2001 level of about 1.5 million annually.

Dr. David Himmelstein, the lead author of the study and an associate professor of medicine at Harvard, commented: “Our findings are frightening. Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy. For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments and deductibles that illness can put you in the poorhouse. And even the best job-based health insurance often vanishes when prolonged illness causes job loss – precisely when families need it most. Private health insurance is a defective product, akin to an umbrella that melts in the rain.”

“For many families, bankruptcy is a deeply shameful experience,” noted Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard and a study co-author. Professor Warren, a leading expert on personal bankruptcy, went on: “People arrive at the bankruptcy courts exhausted – financially, physically and emotionally. For most, bankruptcy is a last choice to deal with unmanageable circumstances.”

According to study co-author Dr. Steffie Woolhandler, an associate professor of medicine at Harvard and primary care physician in Cambridge, Mass.: “We need to rethink health reform. Covering the uninsured isn’t enough. Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it. Only single-payer national health insurance can make universal, comprehensive coverage affordable by saving the hundreds of billions we now waste on insurance overhead and bureaucracy. Unfortunately, Washington politicians seem ready to cave in to insurance firms and keep them and their counterfeit coverage at the core of our system. Reforms that expand phony insurance – stripped-down plans riddled with co-payments, deductibles and exclusions – won’t stem the rising tide of medical bankruptcy.”

Dr. Deborah Thorne, associate professor of sociology at Ohio University and study co-author, stated: “American families are confronting a panoply of social forces that make it terribly difficult to maintain financial stability – job losses and wages that have not kept pace with the cost of living, exploitation from the various lending industries, and, probably most consequential and disgraceful, a health care system that is so dysfunctional that even the most mundane illness or injury can result in bankruptcy. Families who file medical bankruptcies are overwhelmingly hard-working, middle-class families who have played by the rules of our economic system, and they deserve nothing less than affordable health care.”

*****

A copy of the study is available at https://pnhp.org/new_bankruptcy_study or through the American Journal of Medicine, ajmmedia@elsevier.com, (212) 633-3944. The authors have also prepared a supplementary “Fact Sheet” and a “Q&A” on medical bankruptcy, both of which detail the study’s methods and findings. See same link above.

“Medical bankruptcy in the United States, 2007: Results of a national study,” David U. Himmelstein, M.D; Deborah Thorne, Ph.D.; Elizabeth Warren, J.D.; Steffie Woolhandler, M.D., M.P.H. American Journal of Medicine, June 4, 2009 (online).

Physicians for a National Health Program (www.pnhp.org), a membership organization of over 16,000 physicians, supports a single-payer national health insurance program. To contact a physician-spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Will WellPoint support any reform?

Health Insurers Balk at Some Changes

By Reed Abelson
The New York Times
June 2, 2009
The insurance industry says it wholeheartedly embraces a health care overhaul, promising Congress and the president that it will make it much easier for individuals to buy insurance on their own.
Insurers, for example, have agreed to sell policies even to people with pre-existing medical conditions, and to stop basing prices on how healthy or sick someone is.
But so far, the industry has made no such promises about another segment of the health insurance market, one responsible for many people being uninsured in the first place: the market for small employers. By some estimates, about half of the nation’s uninsured are people who are self-employed or work for a small business.
Employer-provided medical insurance remains the bedrock of the nation’s health care system. And yet, while most big employers still provide health benefits, soaring premiums have meant many small businesses can no longer afford to cover their workers. But the small-employer market remains one of the most profitable segments of health insurance, which may be why the industry is not eager to overhaul this lucrative part of the business.
… one of the biggest insurers, WellPoint, opposes changing the way coverage is sold to small employers.
“Those markets generally work today,” said Bradley M. Fluegel, the chief strategy officer for WellPoint, which is a big operator of Blue Cross plans and a major player in the small-business market.
Much of the Congressional talk about health care has not yet focused on what federal oversight, if any, might be necessary for the small-business market. Proposals before the Senate Finance Committee seem to envision the same kind of rules for both the individual and small-business markets.
Mr. Fluegel, the WellPoint executive, warned that if the federal government intervened in the small-business market so that insurance companies could no longer assign the highest premiums to employers with the highest medical costs, insurers would be forced to spread the costs over all their small-business customers.
http://www.nytimes.com/2009/06/03/business/smallbusiness/03insure.html?ref=business&pagewanted=all

WellPoint/Anthem/Blue Cross has become the largest provider of private health plans through its highly successful business model that has kept their premiums very competitive. How have they done that? In the individual market, they have limited their exposure to risk by medical underwriting – not selling policies to individuals who might need health care. In the small-business market, they also limit loss by increasing premiums to unaffordable levels for any business that has an unfavorable claims experience, causing those firms to drop coverage.
The insurance industry’s offer to agree to guaranteed issue in the individual market is dependent on a mandate to require every uninsured individual to purchase insurance. That would distribute risk broadly even if it doesn’t specify how such coverage could be paid for. Guaranteed issue has been opposed by WellPoint since it is not compatible with its business strategy of selling only to the healthy.
What about guaranteed issue in the small-business market? Since current proposals also would permit the continuation of the employer-sponsored market, insurers such as WellPoint would remain successful only if they could continue to use underwriting and premium flexibility in the small-business market. If they were required to issue coverage to every small business that applied, then they would have to have a mandate for all small businesses to purchase coverage. Though that would distribute risk more evenly in the small-business market, it still would defeat WellPoint’s successful strategy of keeping premiums competitive by selling their products to healthy individuals and only to small businesses with healthy employees.
WellPoint worked very hard to defeat reform efforts in California since it would have destroyed its dominance as the insurer of the healthy. There is every reason to believe that WellPoint likewise will oppose reform on a national level if Congress includes measures that would require private insurers to participate in a regulated social insurance program.
Yesterday President Obama told Democratic Senators that he would like Congress to take broad action before the August recess. Can you imagine Congress creating a program of private sector social insurance by then? Right now I’d rate WellPoint stock a very strong BUY!