By Christian Nordqvist
Medical News Today, March 9, 2011
Since Massachusetts implemented its landmark 2006 legislation which made the purchase of health insurance compulsory, the number of personal bankruptcies associated to medical bills or illness has increased, researchers revealed in American Journal of Medicine. Total medical bankruptcies rose from 7,504 in 2007 to 10,093 in 2009 in the state.
However, the actual share of all Massachusetts bankruptcies caused by a medical factor dropped from 59.3% to 52.9%. during the same period.
As the Obama administration’s health law follows many of the patterns of the Massachusetts plan, including the obligatory purchase of health insurance, this latest finding may have implications for the country as a whole. One of the administration’s most powerful arguments in favor of the new federal law was to address the medical bankruptcy problem.
Furthermore, Obama’s recent proposal to allow states to opt out of the nationwide reforms may undermine even more the inadequate standards for health cover that were included in the 2010 legislation. Nationwide plans may become even skimpier, possibly resulting in Massachusetts-like medical bankruptcies.
The authors wrote: “Health costs in the state have risen sharply since reform was enacted. Even before the changes in health care laws, most medical bankruptcies in Massachusetts – as in other states – afflicted middle-class families with health insurance. High premium costs and gaps in coverage – co-payments, deductibles and uncovered services – often left insured families liable for substantial out-of-pocket costs. None of that changed. For example, under Massachusetts’ reform, the least expensive individual coverage available to a 56-year-old Bostonian carries a premium of $5,616, a deductible of $2,000, and covers only 80 percent of the next $15,000 in costs for covered services.”
Dr. David Himmelstein, study leader, said: “Massachusetts’ health reform, like the national law modeled after it, takes many of the uninsured and makes them underinsured, typically giving them a skimpy, defective private policy that’s like an umbrella that melts in the rain: the protection’s not there when you need it. … (In the case of Massachusetts) … while we can’t completely rule out the possibility that the reform reduced medical bankruptcies, any reduction is certainly small.”
The researchers report that in a previous study they discovered that 62.1% of bankruptcies throughout the USA in 2009 were caused by medical issues. That study was often quoted by President Obama and advocates for congressional reform. The study also revealed that 77.9% of those bankrupt individuals were insured when their illness began, including 60.3% who had private insurance.
Historically, Massachusetts has always had fewer medical bankruptcies than other parts of the country, the authors note. The state has a stronger safety net, which includes public hospitals and a free medical care system for the poor which had already existed before recent reforms came in.
The 51% increase in Massachusetts’ total bankruptcy numbers between 2007 and 2009 was not as steep as it was in most of the other federal jurisdictions.
Massachusetts’ health law was passed in 2006 and become fully implemented two years later. The share of residents who were uninsured dropped from 10.4% to 4.4% between 2006 and 2009, a 58% fall. Massachusetts still has the lowest rate of any state in America.
Bankruptcies tend to occur several months after the onset of a financial shock. Therefore, the early 2007 and mid-2009 surveys do provide a good picture of the before and after effects of the health reform.
Co-author Dr. Steffie Woolhandler, said: “American families need the kind of comprehensive coverage that protects people in nations with single-payer national health insurance, such as Canada.”
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“Medical bankruptcy in Massachusetts: Has health reform made a difference?”7
David U. Himmelstein, M.D., Deborah Thorne, Ph.D., and Steffie Woolhandler, M.D., M.P.H.
American Journal of Medicine, March 2011 (print edition).