Harvard Study on Personal Bankruptcy and Medical Expenses

Everyone and his brother have posted on this topic today, so I won’t add (too much) to the flood of words. However, as a service only to the readers of Impact Analysis, here is a link to the actual article online and in pdf.

Beyond the usual factoids that half of personal bankruptcies are related to medical expenses and that most of the bankrupt individuals were insured, you also find that a quarter of the bankruptcies involved cardiovascular diseases, percent; trauma/orthopedic/back problems by nearly one-third; and cancer, diabetes, pulmonary, or mental disorders and childbirth-related and congenital disorders by about 10 percent each.

Debtors’ out-of-pocket medical costs were often below levels that are commonly labeled catastrophic (so, these people were sucked dry by fairly ordinary medical conditions). Having private insurance sometimes made things worse, with debtors going deeper in the hole when their insurance was cancelled. The human face of medical bankruptcy, shown briefly in the paper, was heart-rending:

Debtors’ narratives painted a picture of families arriving at the bankruptcy courthouse emotionally and financially exhausted, hoping to stop the collection calls, save their homes, and stabilize their economic circumstances. Many of the debtors detailed ongoing problems with access to care. Some expressed fear that their medical care providers would refuse to continue their care, and a few recounted actual experiences of this kind. Several had used credit cards to charge medical bills they had no hope of paying.

The co-occurrence of medical and job problems was a common theme. For instance, one debtor underwent lung surgery and suffered a heart attack. Both hospitalizations were covered by his employer-based insurance, but he was unable to return to his physically demanding job. He found new employment but was denied coverage because of his preexisting conditions, which required costly ongoing care. Similarly, a teacher who suffered a heart attack was unable to return to work for many months, and hence her coverage lapsed. A hospital wrote off her $20,000 debt, but she was nonetheless bankrupted by doctors’ bills and the cost of medications.

A second common theme was sounded by parents of premature infants or chronically ill children; many took time off from work or incurred large bills for home care while they were at their jobs.

Finally, many of the insured debtors blamed high copayments and deductibles for their financial ruin. For example, a man insured through his employer (a large national firm) suffered a broken leg and torn knee ligaments. He incurred $13,000 in out-of-pocket costs for copayments, deductibles, and uncovered services—much of it for physical therapy.

Heart disease, cancer, stroke, lower respiratory tract disease, and diabetes accounted for more than two-thirds of the deaths in the U.S. in 2001 (the last year with statistics readily available), according to the CDC. Other stricken with these conditions live on to see their financial resources drained away to cover medical expenses. Not all of these conditions are preventable, but many are. For those readers who are smokers, drinkers to excess, who don’t eat properly or exercise, if the risk of death or disability isn’t threatening, maybe the risk of bankruptcy is.