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Two Thirds of Bankruptcy Filings in 2007 Were Due to Medical Bills

Black Voice News.com, News Report, Chris Levister Posted: Jun 17, 2009

Nearly two-thirds of bankruptcy filings in 2007 cited medical bills as having contributed to financial failure, according to a new report published in the American Journal of Medicine. What might be surprising, however, is it found that 77.9% of those had private insurance.

And in a finding that surprised even the researchers, 78% of those filers had medical insurance at the start of their illness, including 60.3% who had private coverage, not Medicare or Medicaid.

Medically related bankruptcies have been rising steadily for decades. In 1981, only 8% of families filing for bankruptcy cited a serious medical problem as the reason, while a 2001 study of bankruptcies in five states by the same researchers found that illness or medical bills contributed to 50% of all filings. This newest, nationwide study, conducted before the start of the current recession by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a sociology professor at Ohio University, found that the filers were for the most part solidly middle class before medical disaster hit. Two-thirds owned their home and three-fifths had gone to college. Individuals with diabetes, one of the most common chronic diseases in the U.S., and those with neurological illnesses such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167, respectively. Hospital bills were the largest single expense for half of all medically bankrupt families.

Middle class African-Americans who are 1.6 times more likely to have diabetes than non Hispanic whites were hit particularly hard due to prerecessionary job loses and an inability to afford post employment health insurance.

These findings are extremely disturbing but not surprising, said A.J. Rogers, immediate past president of the Inland Empire J.W. Vines Medical Society, a component of the National Medical Association. Americas health care system is broken. This is one more reason why Washington should reconsider health care reform. Covering the insured and underinsured isnt enough. Reform also needs to provide a safety net for middle class families who already have insurance by upgrading their coverage and assuring that they never lose it, he said. Nationally, a quarter of firms cancel coverage immediately when an employee suffers a disabling illness; another quarter do so within a year, the report reads.

About 170 million people get health insurance through an employer but President Barack Obama says soaring healthcare costs hurt the economy and force businesses to drop medical insurance for their workers.

Health-care reform is not a luxury. Its a necessity we cannot defer. Soaring health-care costs make our current course unsustainable. It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions, said Dr. Temetry Lindsey, President CEO Inland Behavioral and Health Services.

Medically bankrupt families with private insurance reported average out-of-pocket medical bills of $17,749, while the uninsureds bills averaged $26,971. Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658.

For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments, and deductibles that illness can put you in the poorhouse, said lead author Himmelstein.

Unless youre Warren Buffett, your family is just one serious illness away from bankruptcy. He said the study underscores President Obamas arguments in calling for health-care reform legislation this year.

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