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NEWS FROM CAMBRIDGE HEALTH ALLIANCE
June 4, 2009
Over 60 Percent of All US Bankruptcies Linked
to Medical Problems
New research finds most victims are middle-class
and have health insurance
Cambridge, MA…Medical problems contributed to over 60 percent
of all bankruptcies in the United States in 2007, according to a
study published online today by the American Journal of Medicine
and slated for the August issue.
The study, the first-ever national random-sample survey of bankruptcy
filers, shows that illnesses and medical bills are linked to a large
and increasing share of bankruptcies. Between 2001 and 2007, the
proportion of all bankruptcies attributable to medical problems
rose by 49.6 percent. More than three-quarters (77.9 percent) were
insured at the start of the bankrupting illness. Additionally, the
data were collected prior to the current economic downturn and likely
understate the current burden of financial suffering.
Following up on a 2001 study in five states, where medical problems
contributed to at least 46.2 percent of all bankruptcies, researchers
from Cambridge Health Alliance/Harvard Medical School, Harvard Law
School, and Ohio University surveyed a random national sample of
2,314 bankruptcy filers in 2007, abstracted their court records,
and interviewed 1,032 of them. They designated bankruptcies as "medical"
based on debtors' stated reasons for filing, income loss due to
illness, and the magnitude of their medical debts.
According to the study, a number of circumstances propelled many
middle-class, insured Americans into bankruptcy. For 92 percent
of the medically bankrupt, high medical bills directly contributed
to their bankruptcy. Many families with continuous coverage found
themselves under-insured, responsible for thousands of dollars in
out-of-pocket costs. Out-of-pocket medical costs averaged $17,943
for all medically bankrupt families: $26,971 for uninsured patients;
$17,749 for those with private insurance at the outset; $14,633
for those with Medicaid; $12,021 for those with Medicare; and $6,545
for those with VA/military coverage. For patients who initially
had private coverage but lost it, the family's out-of-pocket expenses
averaged $22,568.
Because almost all insurance is linked to employment, a medical
event can trigger loss of coverage. Nationally, a quarter of firms
cancel coverage immediately when an employee suffers a disabling
illness; another quarter does so within a year. Income loss due
to illness was also common, but nearly always coupled with high
medical bills.
"The U.S. health care financing system is broken, and not
only for the poor and uninsured," said lead author David U.
Himmelstein, MD, a physician at Cambridge Health Alliance and an
associate professor of medicine at Harvard Medical School. "Middle-class
families frequently collapse under the strain of a health care system
that treats physical wounds, but often inflicts fiscal ones."
"Medical Bankruptcy in the United States, 2007: Results of
a National Study" published by the American Journal of Medicine.
August 2009, Vol. 122, Issue 8. Authors: David U. Himmelstein, MD,
Deborah Thorne, PhD, Elizabeth Warren, JD, and Steffie Woolhandler,
MD, MPH.
Cambridge Health Alliance is an innovative, award-winning
health system that provides high quality care in Cambridge, Somerville,
and Boston's metro-north communities. It includes three hospital
campuses, a network of primary care and specialty practices, the
Cambridge Public Health Dept., and the Network Health plan. CHA
is a Harvard Medical School teaching affiliate and is also affiliated
with Harvard School of Public Health, Harvard School of Dental Medicine,
and Tufts University School of Medicine. Visit us online at www.challiance.org.
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Media Contact
David Cecere
Media Relations Manager
Phone: 617-503-8428
Cell: 617-921-9613
Pager: 617-546-1879
dcecere@challiance.org
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