Over 1/2 of Bankruptcies Due to Health Care

Almost 2/3 of personal bankruptcies in the United States are the result of illness and overwhelming medical bills, despite having health insurance, say researchers. This is a 50% increase from 2001, just 8 years ago. And, it’s important to note 2 things. One is that bankruptcy is harder to declare now than it was before 2001 and that this research was done before the current economic situation, so the situation could, in fact, be worse.

Researchers from Harvard Law School, Harvard Medical School and Ohio University worked together to produce the first known study of this type to cover the entire country. They found that the vast majority (over 77%) of the people who went bankrupt were among those who did have health insurance when they first became ill.

According to a press release describing the study:

Most of the medically bankrupt were solidly middle class before financial disaster hit. Two-thirds were homeowners and three-fifths had gone to college. In many cases, high medical bills coincided with a loss of income as illness forced breadwinners to lose time from work. Often illness led to job loss, and with it the loss of health insurance.

Even apparently well-insured families often faced high out-of-pocket medical costs for co-payments, deductibles and uncovered services. Medically bankrupt families with private insurance reported medical bills that averaged $17,749 vs. $26,971 for the uninsured. High costs – averaging $22,568 – were incurred by those who initially had private coverage but lost it in the course of their illness.

The highest cost illnesses were neurological (such as multiple sclerosis) or chronic, like diabetes.

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