Medical costs lead more people to bankruptcy

Most debtors had health insurance when the illness that fueled their financial problems struck.

By Joel B. Finkelstein, AMNews staff. Feb. 21, 2005.

Washington -- Medical bills have become a major driver of personal bankruptcy -- accounting for half of these filings, according to a recent study.

In a survey of 1,771 people who declared bankruptcy in 2001, more than a quarter cited illness or injury as a main factor. Another quarter reported having more than $1,000 worth of unpaid medical bills, the study's authors report in a Feb. 2 article on the Health Affairs Web site.

The number of overall bankruptcies, at nearly 1.5 million, was 3.6 times higher in 2001 than 1980, but there were 23 times as many medical-related bankruptcies in 2001. About 673,000 medical-related bankruptcies occurred in 2001, the survey found.

"Many had coverage at the onset of their illness but lost it. In other cases, even continuous coverage left families with ruinous medical bills," said lead author David Himmelstein, MD, an associate professor at Harvard Medical School in Boston.

Dr. Himmelstein and senior author Steffie Woolhandler, MD, also of Harvard, are prominent members of Physicians for a National Health Program, which advocates for universal, single-payer health coverage.

According to American Medical Association Chair J. James Rohack, MD, the study "points to the need for health insurance reform that provides affordable access to care."

Although many physicians provide uncompensated care to those who cannot afford treatment, charity care alone is not the answer to the problem, he said. The AMA's plan for reducing the ranks of the uninsured calls for expanding coverage and choice through refundable tax credits inversely related to income, individually selected and owned health insurance, and other changes.