Medical Bills Cause Most Bankruptcies
By Tara Parker-Pope
New York Times blog
June 4, 2009
Nearly two out of three bankruptcies stem from medical bills, and even people with health insurance face financial disaster if they experience a serious illness, a new study shows.
The study data, published online Thursday in The American Journal of Medicine, likely understate the full scope of the problem because the data were collected before the current economic crisis. In 2007, medical problems contributed to 62.1 percent of all bankruptcies. Between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by about 50 percent.
“The U.S. health care financing system is broken, and not only for the poor and uninsured,” the study authors wrote. “Middle-class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.”
The data on medical bankruptcy, compiled by researchers at Harvard Law School, Harvard Medical School and Ohio University, is based on a survey of 2,314 randomly selected bankruptcy filers during early 2007.
Among families who were bankrupted by illness, those with private insurance reported average medical bills of $17,749 compared to those who were uninsured, who faced an average of $26,971 in medical costs. Those who had health insurance but lost it in the course of their illness reported average medical bills of $22,568.
Hospital costs accounted for about half the expenses (48 percent), followed by prescription drugs (18.6 percent), doctor’s bills (15.1 percent) and insurance premiums (4.1 percent). Medical equipment and nursing home care rounded out the list.
The health problems that left patients with the highest out-of-pocket expenses were ranked as follows:
Neurologic (i.e., multiple sclerosis): $34,167
Diabetes: $26,971
Injuries: 25,096
Stroke: $23,380
Mental illnesses: $23,178
Heart disease: $21,955