Biggest cause of U.S. bankruptcies? Medical bills

New report finds medical problems led to bankruptcy for 60 percent of Americans who filed for bankruptcy in 2007.

Over 60 percent of all U.S. bankruptcies in 2007 were driven by medical incidents, according to a new article published in the August issue of The American Journal of Medicine. The rate reflects a 50 percent increase from 2001 when the last survey was done. At that time, 46.2 percent of bankruptcies were attributed to medical problems.

Researchers from Cambridge Hospital/Harvard Medical School, Harvard Law School and Ohio University surveyed a national random sample of 2,314 bankruptcy filers in 2007. They reviewed court records and interviewed 1,032 of the filers who indicated their bankruptcy was medical-related based on their stated reasons for filing, income loss due to illness and the magnitude of their medical debts.

Related findings:

• In 2007, an American family filed for bankruptcy following an illness every 90 seconds; three-quarters of them were insured.
• Most medical debtors were well educated, owned homes, and had middle-class occupations. Three-quarters had health insurance.
• The odds that a bankruptcy had a medical cause were 2.38 fold higher in 2007 than in 2001.
•  Many families with continuous coverage found themselves under-insured, responsible for thousands of dollars in out-of-pocket costs.
• Out-of-pocket medical costs averaged $17,943 for all medically bankrupt families: $26,971 for uninsured patients; $17,749 for those with private insurance at the outset; $14,633 for those with Medicaid; $12,021 for those with Medicare; and $6,545 for those with VA/military coverage.

“The US health care financing system is broken, and not only for the poor and uninsured,” stated the study’s lead author, David U. Himmelstein,MD. “Middle class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.”

The study was supported by the Robert Woods Johnson Foundation.

Reference

“Medical Bankruptcy in the United States, 2007: Results of a National Study.” David U. Himmelstein, Deborah Thorne, Elizabeth Warren, Steffie Woolhandler. American Journal of Medicine, Volume 122, Issue 8 (August 2009).