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.
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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.”
