50% in U.S. Fear Bankruptcy Due to Major Health Event

I suspect that these adults would need to borrow to pay a $500 auto repair or replace a broken fridge too. But that doesn’t grab headlines. For reasons never explained, the money we spend on healthcare is never viewed as the money we spend on anything else.

One-Quarter of U.S. Adults Must Borrow Money for $500 Medical Bill With substantial percentages of adults reporting that they currently have medical debt that they cannot pay in a year or less, it is probably unsurprising that 26% report they would need to borrow money to pay a $500 medical bill.

To do this, 12% say they would use a credit card or get a loan from a financial institution, while another 14% would borrow from a family member or friend.

For some persons, these forms of borrowing could ordinarily be characterized by prompt repayment (such as simply paying off the credit card at the end of the month), but for many others, it is likely to feed into a cycle of accumulating medical debt that cannot be readily repaid.

The need to borrow money to pay a $500 medical bill is particularly common among non-White adults (43%) and those living in households earning less than $40,000 per year (46%).

Source: 50% in U.S. Fear Bankruptcy Due to Major Health Event

5 comments

  1. Dick has it right. These are people so leveraged that they would have problems paying any $500 unexpected expense – medical or otherwise! Sorry about the length of this post, however, since health care is again a major issue in this election period, and since everyone is worried about what Amy Coney Barrett might do to the Patient Protection and Affordable Care Act of 2010 in a decision to be handed down in the 2020 – 2021 term of the Supreme Court, it is time to get into the “way back” machine, Back to the Future … just in case you have forgotten.

    The inability to pay for an unexpected expense remains consistent with what was perhaps the biggest lie of them all in support of 2010 Health Care Reform legislation – that 50+% of all personal bankruptcies were to discharge unpaid medical bills. Remember, everyone now has access to coverage through the public exchange … remember that the D’s believe and assert that PPACA has been a resounding success.

    Two studies were used to justify the Patient Protection and Affordable Care Act of 2010 as necessary because people couldn’t afford to pay their medical bills and had to declare bankruptcy.,

    See:
    http://www.pnhp.org/new_bankruptcy_study/Bankruptcy-2009.pdf Source: David U. Himmelstein, Deborah Thorne, Elizabeth Warren, Steffie Woolhandler, Medical Bankruptcy in the United States, 2007: Results of a National Study, The American Journal of Medicine, 2009
    http://content.healthaffairs.org/content/early/2005/02/02/hlthaff.w5.63.full.pdf+html Source: David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler, Illness And Injury As Contributors To Bankruptcy, Health Affairs, 2005

    In the 2005 report studying 2001 medical bankruptcies, a bankruptcy was deemed to have a medical cause for any of the following reasons – if:
    – the survey respondent said it did,
    – there were uncovered medical bills exceeding $1,000,
    – a household member lost at least two weeks of work-related income because of illness/injury, or
    home equity was used to pay medical bills.

    So, the high percentage of so-called medical bankruptcies in that study resulted from using a gerrymandered definition.

    The authors of both studies failed to note that most of the debts discharged in bankruptcy were NOT due to medical expenses. In the 2009 report that studied 2007 bankruptcies, the average discharged indebtedness for a medical bankruptcy was $44,622. Non-medical bankruptcies had average indebtedness of $37,650. Medical bankruptcies discharged an average of $4,988 of medical debts.

    Ask yourself – would everyone have avoided filing for bankruptcy if their indebtedness had only been $39,634 ($44,622 – $4,988) with no medical debt at all? Conversely, would everyone still have declared bankruptcy if they only had the $4,988 of medical debts to discharge?

    Researchers should have identified individuals with comparable medical expenses and financial circumstances – comparing those who filed for bankruptcy and with similarly situated individuals who did not file for bankruptcy.

    See, for comparison:
    Todd J. Zywicki’s July 17, 2007 testimony, before the US House of Representatives, Committee on the Judiciary – Hearing on “Working Families in Financial Crisis: Medical Debt and Bankruptcy”, or
    Ning Zhu, “Household Consumption and Personal Bankruptcy”, March 21, 2008.
    See also: http://mercatus.org/publication/written-testimony-medical-debt-and-bankruptcy

    Yes, that is our own, famous Senator Elizabeth Warren in those two studies claiming widespread medical bankruptcy – speaking with forked tongue.

    For example, the study classifies uncontrolled gambling, drug or alcohol addiction, and the birth or adoption of a child as “a medical cause.” There are indeed situations in which a researcher may legitimately classify those conditions as “medical,” but a study that is being used to prove that Americans are going bankrupt as a result of crushing medical debt is not one of them. A father who has gambled away his family’s mortgage payment is not the victim of crushing medical bills. Similarly, new parents who find they can no longer afford their previous lifestyle now that one of them has to stay home with the baby (or that they have to fund child care) will usually find the obstetrician’s bill the least of their problems. Babies are a financial hardship even if a OB/GYN and a hospital didn’t charge for delivery. The study’s central findings were that 54.5% of all bankruptcies have a “medical cause” and that 46.2% of all bankruptcies have a “major medical cause.” Even if this were true, bankruptcy law already provides adequate safeguards for the special problems posed by medical bankruptcies.

    What do the real data show? Numerous studies have found the number of bankruptcies caused by medical debt to be dramatically lower than Himmelstein and Warren report – down in the single digits. Among the recent is a study of 5,203 bankruptcy filers (about three times the number examined by Himmelstein and Warren) by the Executive Office of the United States Trustee. It found that 54% of filers listed no medical debt at all and that medical debt accounted for about 5.5% of the total general unsecured debt. About 90.1% of filers reported no medical debt or medical debt of less than $5,000. Of the 46% who reported medical debt, 78% reported medical debt of below $5,000, with an average of only $1,212 within that group—hardly enough to send the average family into bankruptcy. Overall, 1% of the cases accounted for a total of 36.5% of medical debt, and less than 10% of all cases represent 80% of all medical debt. In short, in a tiny number of cases, substantial medical debt does force bankruptcy. In a few others, medical debt combines with otherwise high levels of mortgage, automobile, or credit card debt to tip someone into bankruptcy. But the notion that half of bankruptcies are driven by medical debt is unsupported and insupportable.

    Keep in mind that there are no data that suggest or confirm that the Patient Protection and Affordable Care Act of 2010 (Health Reform) has reduced the number or severity of personal bankruptcies. There is a study, by two of these same researchers, that confirms that the Massachusetts health reform legislation (which preceeded PPACA) DID NOT reduce medical bankruptcies.

    Remember the other reasons why we got the Patient Protection and Affordable Care Act? It was because those big, bad insurance companies wouldn’t take all comers, including individuals with significant medical issues/preexisting medical conditions. Pre-ex is on every D’s lips these days…

    We were in crisis mode and regular Americans in the middle class needed relief. Here’s a few quips from Nancy Pelosi and President Obama and Harry Reid:
    Pelosi – 7/09 – “They are the villains in this. They have been part of the problem in a major way,” Pelosi said of the insurance industry after her weekly press conference.
    Pelosi – 5/11 – Pelosi spokesman Nadeam Elshani “Americans will have an opportunity to shop for affordable coverage on the health exchanges and will no longer be at the mercy of insurance companies placing coverage limits on policies.”
    Obama – 8/09 – “We are held hostage at any given moment by health insurance companies that deny coverage or drop coverage or charge fees that people can’t afford,”
    Obama – 8/09 – “It’s wrong. It’s bankrupting families. It’s bankrupting businesses. And we are going to fix it when we pass health insurance reform this year,”
    Reid – 9/09 – “Health care is a moral issue,” “The insurance scam that we have in America affects every one of us, and we’re going to change it.”
    At a Reid rally – 9/09 – Veronica De La Cruz, a former CNN anchor who lost her younger brother, Las Vegas resident Eric De La Cruz, to a heart problem earlier this year said her brother could have been saved by a timely heart transplant, but was denied private insurance. Eric De La Cruz passed away July 4. “Eric didn’t die because of a lack of knowledge,” she said. “He didn’t die because of a limit to our technology. He died because he could not get coverage from an industry that recorded $1.5 billion in profits last year among its top five companies.”*
    * Of course, Ms. De La Cruz failed to mention in her remarks that Eric had failed to enroll in medical coverage before his heart condition was diagnosed (over five years earlier), that he was also denied coverage by Medicaid and Medicare, and that Medicare only relented to provide taxpayer support “after five years of applications, appeals and interventions from Reid and others”. So, by the time they raised $800,000 from private sources to pay for the transplant (she fails to criticize the hospitals or doctors who wanted payment up front), Eric died from related and different medical issues.

    So, remember that PPACA included a unique insurance program for the period 2011 – 2013 – the Preexisting Condition Insurance Program. How’d that do? Did we get tens of millions of Americans to enroll because the big bad insurance companies kept them out of regular medical coverage due to pre-existing conditions? Here’s the program and the enrollment data – never exceeded 115,000 enrollees in any month !!!!!!!!
    https://www.cms.gov/CCIIO/Programs-and-Initiatives/Insurance-Programs/Pre-Existing-Condition-Insurance-Plan
    https://data.cms.gov/Marketplace-Pre-Existing-Condition-Insurance-Plan-/Monthly-Pre-Existing-Condition-Insurance-Plan-Enro/dpuq-z7nj/data

    Get ready for the D’s to repeat the big lies … one more time. And get your wallets out you deplorable taxpayers!

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  2. Credit reporting agencies have said that they will no longer lower your credit score for a past due medical bill under $500, so that is good news for anyone unable to pay, LOL. I am sure after they read this it will go to $1,000, or more before to long. Don’t they know that doctors and hospitals will take payments, I have paid as little as $50 per month to pay off a $1,500 medical bill, years ago. For those idiots that want national healthcare, just take one look at the SNAFU of the Veterans Hospital System or has anyone ever been to the Department of Motor Vehicles. Do you really want the government running your healthcare any more than they are doing today?

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