[Homestead] Bankruptcy causes
tvoivozd at infionline.net
Wed Feb 2 07:49:45 EST 2005
Over half of bankrupts have medical insurance---of course invalids don't
work, lose their jobs and quickly lose their insurance, their homes and
automobiles. Add to this the insurance companies passion for seizing
any opportunity to throw the hook during any long, expensive
illness---if you get sick from anything more serious than a common cold,
you better find a warm sidewalk air vent and a big cardboard box to
place over it---it can get cold for a family on the street.
Boston.com THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
The Associated Press
Illness trigger about half of bankruptcies
By Mark Jewell, AP Business Writer | February 2, 2005
` BOSTON --Costly illnesses trigger about half of all personal
bankruptcies, and most of those who go bankrupt because of medical
problems have health insurance, according to findings from a Harvard
University study to be released Wednesday.
Researchers from Harvard's law and medical schools said the findings
underscore the inadequacy of many private insurance plans that offer
worst-case catastrophic coverage, but little financial security for less
"Unless you're Bill Gates, you're just one serious illness away from
bankruptcy," said Dr. David Himmelstein, the study's lead author and an
associate professor of medicine. "Most of the medically bankrupt were
average Americans who happened to get sick."
The study, to be published online Wednesday by the journal Health
Affairs, distributed questionnaires to 1,771 bankruptcy filers in 2001
in California, Illinois, Pennsylvania, Tennessee and Texas. That year,
there were 1.46 million personal bankruptcies in the United States.
More than 900 of those questioned underwent more detailed interviews
about their financial and medical circumstances for what the authors say
is the first in-depth study of medical causes of personal bankruptcies,
which have risen rapidly in recent years.
Illness and medical bills were cited as the cause, at least in part, for
46.2 percent of the personal bankruptcies in the study. Himmelstein said
the figure rose to 54.5 percent when three other factors were counted as
medical-related triggers for bankruptcies: births, deaths and
pathological gambling addiction.
The study estimates medical-caused bankruptcies affect about 2 million
Americans each year, counting debtors and their dependents, including
Most of those seeking court protection from creditors had health
insurance, with more than three-quarters reporting they had coverage at
the start of the illness that triggered bankruptcy. The study said 38
percent had lost coverage at least temporarily by the time they filed
for bankruptcy, with illness frequently leading to the loss of both a
job and insurance.
Out-of-pocket medical expenses covering co-payments, deductibles and
uncovered health services averaged $13,460 for bankruptcy filers who had
private insurance at the onset of illness, compared with $10,893 for
those without coverage. Those who initially had private coverage but
lost it during their illness faced the highest cost, an average of $18,005.
"We need to rethink health reform," said Dr. Steffie Woolhandler, a
study co-author and associate professor of medicine at Cambridge-based
Harvard. "Covering the uninsured isn't enough. We also must upgrade and
guarantee continuous coverage for those who have insurance."
Susan Pisano, a spokeswoman for America's Health Insurance Plans,
representing nearly 1,300 health insurance providers, said the study did
not adequately explore the role that disability income protection plans
and personal savings can play in helping someone with a medical problem
"It's very important to ask questions about what the financial stressors
are for American families, but we don't think this study digs deeply
enough," Pisano said.
The findings indicate medical-related bankruptcies hit middle-class
families hard -- 56 percent of the filers owned a home, and the same
number had attended college.
"Families with coverage faced unaffordable co-payments, deductibles and
bills for uncovered items like physical therapy, psychiatric care and
prescription drugs," Himmelstein said.
The study, funded by the Robert Wood Johnson Foundation, did not examine
how many bankruptcy filers were from dual-income families where both
partners had insurance, Himmelstein said.
Jeff Morris, resident scholar at the American Bankruptcy Institute,
founded by Congress in 1982 to analyze bankruptcy trends, said the
Harvard findings roughly mirror those of a 1996 ABI study in which 57
percent of bankruptcy filers cited medical problems as a primary
bankruptcy cause. Respondents in that study were more likely to cite
three other factors as primary causes, including easy access to credit,
job loss and financial mismanagement.
Morris said he was aware of no data indicating that the Harvard study,
which was based on 2001 bankruptcy filings, does not accurately reflect
current trends in medical-related bankruptcies.
"Medical coverage is becoming more for catastrophic loss than for
intermediate expenses," Morris said.
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