Feb. 4, 2005 – A study published Wednesday in the policy journal Health Affairs found that approximately half of people in the US who file for bankruptcy cite medical costs as a significant reason for their financial troubles. Based on a survey of 1,771 personal bankruptcy filers, the researchers extrapolated that between 1.9 and 2.2 million people were driven into bankruptcy because of health care costs in 2001.
Led by David Himmelstein, an associate professor of medicine at Harvard Medical School, the researchers further found that three-quarters of those "medical bankruptcy" filers had insurance at the onset of illness. Analysts thus conclude that providing health care coverage to the millions of uninsured Americans will not necessarily save severely ill people from financial hardship unless other reforms are enacted to improve coverage.
The researchers reported four "deficiencies in the financial safety net for American families confronting illness." For instance, in addition to the 45 million people in the US lacking health insurance, many more Americans experience involuntary gaps in coverage due to unaffordable premiums, loss of employment -- sometimes due to illness -- and other factors. The study found that even short lapses in health insurance can lead to severe debt and bankruptcy.
Other major causes of medical bankruptcy identified in the study include deficiencies in health insurance plans, job loss and subsequent insurance loss due to illness or need to take care of sick family members, lack of disability benefits or paid sick leave.
"Only broad reforms can address these problems," wrote the researchers. "Even universal coverage could leave many Americans vulnerable to bankruptcy unless such coverage was much more comprehensive than many current policies." They also suggested the separation of health insurance from employment, so that job loss would not lead to loss of coverage; the closing of loopholes in health insurance plans that force families to pay exorbitant costs for medically necessary care; and better safety net programs to help families financially struggling when their primary income earner is ill or caring for a sick family member.