By Kaitlin Lanier
Right now, the B-word is in headlines like never before. And the number of filings is accelerating. However, what most people do not know is the cause of all this bankruptcy. Surprisingly enough, the cause of half of all bankruptcies is illness and medical bills. And even more surprising, most of the people filing bankruptcy because of medical bills DID have health insurance. More than three quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy. Therefore, having or not having health insurance is not strictly the problem. Bankruptcy can occur even if an individual or family has a good health insurance plan.
Today’s health insurance policies contain high deductibles, co-pays, and many exclusions, which in turn offer little protection during a serious illness. Even many private insurance companies, which offer worst-case catastrophic coverage, provide very little financial security for less severe illnesses. Dr. David Himmelstein, an associate professor of medicine and lead author of the Harvard study of bankruptcy causes, says, “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who happened to get sick.”
Sources:
Medical Bills Leading Cause of Bankruptcy, Harvard Study Finds by Aflac
Medical Bills Make Up Half of Bankruptcies by Associated Press
MarketWatch: Illness and Injury as Contributors to Bankruptcy by David Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler
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