PRESIDENT BARACK Obama’s push for healthcare reforms have been boosted by a new study that shows a sizeable increase in bankruptcies, over six years, caused in part by ever-higher medical expenses.
The study, by Harvard University researchers, found that medical bills, plus related problems such as lost wages for the ill and their caregivers, contributed to 62 per cent of all bankruptcies filed in 2007.
On the campaign trail last year and in the White House this year, Obama had cited an earlier study by the same authors showing that such expenses played a part in 55 per cent of bankruptcies in 2001.
Medical insurance isn't much help, either. About 78 per cent of bankruptcy filers burdened by healthcare expenses were insured, according to the survey, to be published in the August issue of the American Journal of Medicine.
“Health insurance is not a guarantee that illness won’t bankrupt you,” says Steffie Woolhandler, one of the authors, a practising physician and an associate medical professor at Harvard.
“Lots of health insurance comes with big co-payments, deductibles and uncovered services,” she says. “So you can be insured and still end up with big bills. At the same time, even if you have good insurance through your employer, you can lose it if you get sick and can’t work.”
Most people who filed medical-related bankruptcies “were solidly middle class before financial disaster hit”, the study says. Two-thirds were homeowners and most had gone to college.
The study does not suggest that medical expenses were the sole cause for these bankruptcies, but it does identify them as a contributing factor. The increase in such filings occurred despite a 2005 law aimed at making it more difficult for individuals to seek court protection from creditors.
And the latest study probably understates the current burden of medical expenses because it is based on bankruptcies filed before the recession hit.
The findings by a team of Harvard researchers from the law and medical schools are expected to help fuel the debate over what type of healthcare system is right for the US.
In a letter last Wednesday, Obama made another push for a healthcare overhaul, reiterating his concern about the financial burden the current system places on families and businesses.
“Soaring healthcare costs make our current course unsustainable,” he wrote in the letter to Senators Edward Kennedy and Max Baucus, who are leading efforts to develop health-care legislation.
“It is unsustainable for our families, whose spiralling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the check-ups and prescriptions they need.”
The study found that medical-related bankruptcy filers with private insurance reported average medical bills of $17,749.
By comparison, people who filed for bankruptcy without insurance reported average medical expenses of $26,971.
Individuals with diabetes and neurological disorders, such as multiple sclerosis, had the highest medical bills, averaging $26,971 for those with insurance and $34,167 for those without.
Hospital bills were the largest expense for about half the families who filed health-related bankruptcies. – ( Los Angeles Times/Washington Post)