From the hospital to bankruptcy
Any health care reform must address how medical costs ruin families' financial lives.
By BARRY ROSENZWEIG
July 15, 2009
Minneapolis Star Tribune
No conversation about reform of our health care system is complete unless it includes a discussion of how medical costs are driving Americans to bankruptcy court. The first nationwide study on medical causes of bankruptcy (released June 4 by Harvard Law School, Harvard Medical School and Ohio University) found that 62.1 percent of all bankruptcies filed in 2007 were related to medical problems. This represents a 50 percent increase since 2001, according to the researchers.
Those people seeking the protection of bankruptcy due to uncovered medical expenses are typically middle class, according to the study. Two-thirds of them own their homes. Three-fifths have college degrees. They are employed and have medical coverage from private insurers when the crisis hits, but, by the time they are considering bankruptcy, most have lost their jobs due to their illness, have lost their medical coverage and are unable to get new private coverage. They are often stuck in a Catch-22: too well-off for Medicaid but unable to afford private health insurance or unacceptable to private insurers because of their preexisting conditions. They further risk their health because they must balance buying food and paying their rent or mortgage against buying medications.
Unless you are Warren Buffet, or at least very wealthy, you are just one serious illness away from bankruptcy. Most health insurance policies have loopholes, copayments and deductibles that can bankrupt a family in a short period of time. This study found that patients with diabetes typically pay an average of $26,971 in out-of-pocket expenses each year. Those with multiple sclerosis pay $34,167. The largest single expense for medically bankrupt families is a hospital stay, and prescription drugs make up the largest recurring expense, totaling on average 18.6 percent of their total medical debts. Patients often put part of these debts on their credit cards, thus accumulating large amounts of credit card debt added to the bills they owe to medical facilities.
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When it comes to reform of our health care system, there's a lot to talk about. As we continue the debate, let's not forget the hundreds of thousands of people who have been forced into bankruptcy due to the inefficiencies of our health system and the exorbitant costs of uncovered medical expenses.
Barry Rosenzweig is the senior attorney with Rosenzweig Law Office, P.A., in Edina, which has handled bankruptcy and other cases for more than 20 years.
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