Medical debt increasingly cited as factor in bankruptcies

Most people filing at least partly because of medical debt were insured, according to a report by single-payer advocates.

By Doug Trapp, amednews staff. Posted June 30, 2009.

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Nearly two-thirds of bankruptcies in early 2007 were due in part to medical debt -- an increase of more than 20% since 2001 -- according to a national study of more than 2,000 cases.

Of those who filed for bankruptcy due in part to medical debt, 92% had debt of more than $5,000 or 10% of their income, according to "Medical Bankruptcy in the United States, 2007: Results of a National Study," published in the May 18 issue of the American Journal of Medicine. The study is based on questionnaires returned by 2,314 debtors, plus court records and phone interviews.

The study is a follow-up to a similar 2001 analysis based on bankruptcy filings in five states. The earlier study found that medical problems contributed to at least 46.2% of bankruptcies in those states. The newer study -- which required larger debts to label a bankruptcy as medically related -- found that the bankruptcies of 62.1% of people who filed between Jan. 25 and April 11, 2007, were at least partly related to medical debt. Also, fewer than one-third of these debtors were uninsured when they filed.

"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," said co-author David Himmelstein, MD, associate professor of medicine at Harvard University.

Dr. Himmelstein and another co-author -- Steffie Woolhandler, MD, MPH -- are members of Physicians for a National Health Program, which advocates for a single-payer health system. Dr. Woolhandler is also an associate professor of medicine at Harvard University.

Reasons for the bankruptcies examined in the study included the following:

• 38.2%: The debtor or spouse lost at least two weeks of income due to illness or became completely disabled.
• 34.7%: The debtor had medical bills of more than $5,000 or more than 10% of income.
• 32.1%: The debtor said medical problems of self or spouse led to the bankruptcy.
• 29%: Medical bills were the reason for the bankruptcy.
• 5.7%: The debtor mortgaged the home to pay medical bills.

The study is available online (download.journals.elsevierhealth.com/pdfs/journals/0002-9343/PIIS0002934309004045.pdf).

This content was published online only.

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