House Members Debate Medical Bankruptcy Numbers
By Jane Norman, CQ HealthBeat Associate Editor
CQ HEALTHBEAT NEWS
July 28, 2009
A House Judiciary subcommittee hearing on medical debt turned at times into a battle Tuesday between Democrats and Republicans over single-payer health insurance and the health care overhaul — though, as one Republican member observed, the panel has no jurisdiction over health care.
The hearing in the Commercial and Administrative Law Subcommittee tackled a subject that often comes up in discussions of the need for health care system changes, and that’s how often Americans declare bankruptcy because of heavy medical bills. A recent study published in the American Journal of Medicine — and written by an advocate of single-payer insurance — found 62 percent of bankruptcies in 2007 tracked back to medical debt in some form.
That study came under fire at the hearing from an American Enterprise Institute scholar who said it overstated the problem.
Subcommittee Chairman Steve Cohen, D-Tenn., said the problem with medical bankruptcies “lies with the runaway cost of health care in America” so that when financial20disaster hits, it hits hard. Cohen said he’d like to hear ideas for amending the Bankruptcy Code to aid people burdened with medical debt, including revisiting a 2005 revision of bankruptcy law.
Judiciary Committee Chairman John Conyers Jr., D-Mich., agreed that changes should be made in credit counseling requirements under the 2005 law because for people with medical debt “it would not make one iota of difference in their financial lives.” Conyers, who plugged a single-payer plan, also said that the House health overhaul bill (HR 3200) should be amended to include a rule that no family should have to pay more than 2.5 percent of gross adjusted annual income in out-of-pocket expenses for health care. Conyers said it should include a cap on premiums so that “no family should pay an unreasonable amount on health insurance.”
Elizabeth Edwards, a senior fellow at the Center for American Progress Action Fund and the wife of ex-Democratic presidential candidate John Edwards, testified that “medical expenses are a major factor in the majority of bankruptcy filings.” Edwards said that a recent analysis by the Commonwealth Fund found 25 million adults who were underinsured, with out-of-pocket medical spending that took up 10 percent of family income. Another study by the Center for Studying Health System Change found one out of five Americans reported problems paying medical bills in 2007, she said.
“Congress can fix these problems” by approving the health overhaul, she said.
But Rep. Trent Franks, R-Ariz., said he objected that “somehow the answer to medical ba nkruptcy is nationalized health care.” Franks said he doubted the federal government could save money by “doing anything of this complexity” such as health care. “The highway of history is littered with the wreckage of governments who thought socialistic perspectives or tendencies would somehow create more products or services that would be better or cheaper,” he said.
Observed Rep. Darrell Issa, R-Calif.: “The chairman has cleverly found a way to get into the health care debate, which we have virtually no jurisdiction over.”
Steffie Woolhandler, a physician and professor of medicine at Harvard Medical School who was the senior author of the study that found 62 percent of bankruptcies linked to medical debt, said that between 2001 and 2007 the proportion of all bankruptcies attributable to medical problems rose by 49 percent.
“The striking conclusion from our study is that private health insurance is a defective product that leaves millions of middle-class families vulnerable to financial ruin,” said Woolhandler. A single-payer system — which was not considered by the committees of jurisdiction for the health overhaul but continues to be pushed by advocates, some of whom applauded in the audience — “is not socialized medicine — it’s socialized insurance, like Medicare for all,” said Woolhandler.
But Aparna Mathur, a research fellow at the American Enterprise Institute, said her studies have found that “the extent of the problem is being overstated and therefore misdiagnosed.” Mathur said data from the Survey of Consumer Finance, which samples 4,500 households every three years, found medical indebtedness has not changed significantly during the past decade. Data from several surveys suggests medical debt is responsible for 16 to 29 percent of bankruptcies, said Mathur. While rising health care costs are an area of concern, families are being pushed to the brink of bankruptcy for a multitude of reasons, she said.
John Pottow, a University of Michigan law school professor, said any study, however, that doesn’t take into account that some credit card debt is actually medical debt is “missing the point.” Many people pay co-pays or other bills with credit cards, said Pottow. He said his own research has found that elderly Americans are increasingly filing for bankruptcy, rising from 2 percent of all filers in 1991 to about 7 percent in 2007. Of those filers, Pottow said he has found 39 percent specifically identified medical problems of the debtor or spouse as a reason, even though the elderly are covered by Medicare and thus should not have high medical bills.