Insured, but Bankrupted Anyway
By Anne Underwood
New York Times Prescriptions blog
September 7, 2009
Dr. David Himmelstein is an associate professor of medicine at Harvard Medical School and a primary care doctor at the Cambridge Hospital in Massachusetts. Dr. Himmelstein is also a founder of Physicians for a National Health Program. In 2005 and 2009, he helped write major studies finding that medical bills were a leading contributor to personal bankruptcies in the United States. He spoke to the freelance writer Anne Underwood.
Q. How many medical bankruptcies are there annually in this country?
A. The forecast for this year is that there will be 1.4 million to 1.5 million total bankruptcy filings. Our data say 62 percent of those will be medical. That works out to around 900,000 cases, and each one affects about 2.7 people. That makes roughly 2.4 million people who will suffer from new medical bankruptcy filings in 2009 alone.
Q. What’s the fallout from declaring medical bankruptcy?
A. We know that bankruptcy in general is considered hugely shameful. People who will tell you the intimate details of their sex lives will refuse to tell you about their bankruptcies. It shows up for years on credit reports. It creates problems in obtaining housing and getting jobs.
What we don’t have in our data is detailed knowledge of how medical bankruptcy affects people’s lives in the long term. There’s only short-term follow-up on these people. We know that six months later, they’re having great difficulty getting medical care. Their kids often have to change schools. Elderly relatives they cared for have their care disrupted. They often tell us they’re suffering utility shutoffs, forgoing food and skipping meals.
Q. A major goal of health care reform is to cover the uninsured. But does covering more people necessarily mean that medical bankruptcies will decline?
A. No. Our most recent study found that nearly two-thirds of Americans who declared bankruptcy cited illness or medical bills as a significant cause (PDF) of their bankruptcies. And of the medically bankrupt, three-quarters of that group had insurance, at least when they first got sick.
Q. How do people go bankrupt in spite of having insurance?
A. We found two categories of problems. Some people were too sick to work and lost their jobs. Along with their jobs, they lost their insurance. The second group had continuous coverage, but their policies had so many co-pays, deductibles and loopholes that they were bankrupted in spite of having coverage. Most of those who declared bankruptcy were in the latter group.
Q. Would any of the plans under discussion on Capitol Hill reduce the rate of medical bankruptcies?
A. Only the single-payer plan sponsored by Representative John Conyers and Senator Bernie Sanders. The others pretty clearly do little or nothing for medical bankruptcy.
Q. How would a single-payer system reduce medical bankruptcies?
A. A single-payer system, such as the one proposed by my colleagues and myself, not only covers everyone, but also eliminates co-pays, deductibles and virtually all uncovered medical bills. Both the Sanders and Conyers bills would work that way. That’s how it works in Canada. Every Canadian has coverage with zero co-pays and zero deductibles. As a result, when they get sick, they’re not forced to pay for care. It’s the coincidence of bills coming when you’re least able to pay them that creates the problem.
Q. We’re hearing a lot of criticism of the national health care system in Canada. What is the rate of medical bankruptcy there?
A. Colleagues in Canada tell us that medical bills per se almost never cause bankruptcies in that country. The relatively small number of medical bankruptcies seems to be among people who suffer a sharp drop in income because of illness. Canada does not have a full disability and joblessness safety net. We’re planning a study with Canadian colleagues now to study this formally.
Q. Is there anything in the other plans under discussion on Capitol Hill that you like?
A. What’s being discussed is pretty much a clone of what we’ve done in Massachusetts [since the state instituted an individual mandate in 2007]. From our study and from my own observations as a doctor in Massachusetts, more people are now covered, but access to care hasn’t improved substantially. For many people, it’s worse. Saying that everyone now has coverage is like saying you’re dressed when you have a hospital gown on. If you look at the back, not much is covered.
Q. Have medical bankruptcies declined in Massachusetts?
A. We don’t know. We know that as of 2007, when we collected our data, Massachusetts was in line with the rest of the nation in the proportion of bankruptcies that were caused by medical problems. We’re planning to update that to look at what’s happened in the last two to three years. We know that with mandated coverage for someone my age — I’m in my 50s — the cheapest policy costs $4,800 annually and comes with a $2,000 deductible. That means you’ve laid out $6,800 dollars in premiums and medical bills before you have any coverage at all.
For many of our patients, that’s worse off than they were before. We had a free-care policy in our state that was quite liberal. At the hospital where I work, anyone making less than 400 percent of the poverty level could get free or reduced-priced health care. Two surveys have shown that about one in six insured people in Massachusetts are still unable to afford medical care.
Q. In your opinion, then, the main plans under consideration on Capitol Hill miss the point.
A. It’s like debating the difference between aspirin and Tylenol for a cancer patient.