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Illness triggers half of bankruptcies
I know we just had a lengthy health care discussion a couple weeks ago, but I thought this was an interesting study that just came out, showing major middle class health care issues.
Source: Chicago Sun Times
| quote: | Illness triggers half of bankruptcies
February 2, 2005
BY LORI RACKL Health Reporter
When Annette Ayers took her asthmatic son Noel to the emergency room, she had no idea it would eventually land her in bankruptcy court.
The single mom from Harvey said the $5,000 in medical bills that stemmed from her son's three-day hospital stay sent her spiraling into debt.
A collection agency took $300 a month from her modest paychecks. Ayers started to miss mortgage and car payments. In 2003, four years after her son's hospital stay, Ayers declared bankruptcy.
"I tried to pay but it was just too much," said Ayers, 45. "Once you get behind, it's hard to catch up. I had no other choice."
A new Harvard study of bankruptcy cases shows Ayers' plight is all too common. Medical bills and illnesses are a major cause of roughly half of this country's personal bankruptcies, according to the study published today on the Web site of the journal Health Affairs.
Touted as the first in-depth analysis of medical causes of bankruptcy, the study looked at 1,771 court records of people who filed for bankruptcy in 2001 in five federal districts, including one in Illinois. More than half of those bankruptcy filers were interviewed in detail about their finances and health. The researchers determined that 46.2 percent to 54.5 percent of the nearly 1.5 million personal bankruptcy filings in 2001 could be chalked up, in large part, to medical problems.
"Unless you're Bill Gates, you're just one serious illness away from bankruptcy," said Dr. David Himmelstein, lead author of the study and associate professor of medicine at Harvard. "Most of the medically bankrupt were average Americans who happened to get sick. Health insurance offered little protection."
Mostly middle-class problem
The researchers estimated that some 40,168 of Illinois' 79,777 personal bankruptcies last year were medical bankruptcies, affecting 111,544 debtors and their families.
The study found that the majority of medical bankruptcy filers nationwide were middle-class homeowners with some college education. They usually had health insurance, too. More than 75 percent of people in medical bankruptcy were insured when they first got sick.
"Families with coverage faced unaffordable co-payments, deductibles and bills for uncovered items like physical therapy, psychiatric care and prescription drugs," Himmelstein said. "And even the best job-based health insurance often vanished when prolonged illness caused job loss -- precisely when families needed it most."
The study's findings are especially troubling as more Americans get their coverage from consumer-driven health insurance plans that can carry large deductibles, leaving them vulnerable to hefty medical expenses, said study co-author Dr. Steffie Woolhandler.
Insurance often inadequate
"A larger share of American workers are going to have insurance that's like a paper umbrella," Woolhandler said. "It looks good, and it might even protect you in a sprinkle, but it melts away in a downpour."
Among those whose illnesses led to bankruptcy, out-of-pocket medical costs averaged $11,854. Cancer proved to be a costly diagnosis, with the average patient racking up $35,878 in expenses.
Jeff Morris, resident scholar for the American Bankruptcy Institute in Virginia, said the Harvard study "confirms a lot of people's assumptions about the causes of bankruptcy."
Medical bills don't have to be in the tens of thousands of dollars to destroy a family's finances, he said.
For people without much buffer between income and expenses, "a $3,000 or $5,000 loss can be a pretty catastrophic number," Morris said.
People often resort to getting by on high-interest credit cards. "In a short time," he said, "that amount of debt can be impossible to get out from under, absent some kind of bankruptcy relief." |
I work at a law office dealing with bankruptcy & foreclosure law and foreclosures have been skyrocketing as well the last few years, especially last month. Thoughts?
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