Monday, August 10, 2009

The Number One Cause of Bankruptcy

It has been pointed out to me, in rebuttal, that my previous assertion that Medical bills are the number one cause of bankruptcy in the USA is not true. This is debatable, but the debate does not change the point.

The furor is over a study that many are trying to put into disrepute. The major problem that the detractors have is that the study was a peer reviewed, joint effort between the Harvard Medical School and the Harvard Law School.

I would like to handle this in two phases.

First I will take the detractors criticism at face value, then I will present some stats from the Harvard findings.

17%. That is the number that the detractors say is the true percentage of bankruptcies caused by medical bills. 17%.

Remember, the people who are presenting this number are politically and/or financially motivated (prove me wrong) to come up with the smallest number possible and the best they could come up with was 17%. Well, let's suppose they are right. I am not sure they are making their point. If almost 20 per cent of all bankruptcies are caused by medical bills then there is a national crisis that requires immediate attention. End of argument.

Let me repeat. If the detractors are correct, there is still a national crisis that needs immediate attention.

Now here are some facts from the Harvard Study:
Medical Bankruptcy – Fact Sheet

David U. Himmelstein, M.D., Deborah Thorne, Ph.D., Elizabeth Warren, J.D., Steffie Woolhandler, M.D., M.P.H.

• In May 2009, more than 5,000 families filed for bankruptcy every business day. For all of 2009, the total is expected to reach about 1.4 million. The average personal bankruptcy involves 2.71 debtors and dependents. In total, an estimated 3.8 million Americans will be involved in personal bankruptcy filings this year.

• Illness and medical bills were linked to at least 62.1% of all personal bankruptcies in 2007. Based on the current bankruptcy filing rate, medical bankruptcies will total 866,000 and involve 2.346 million Americans this year – about one person every 15 seconds.

• Using identical definitions in both years, the proportion of bankruptcies attributable to medical problems rose by 49.6% between 2001 and 2007.

• Most medically bankrupt families were middle class before they suffered financial setbacks. 60.3% of them had attended college and 66.4% had owned a home; 20% of families included a military veteran or active-duty soldier.

• Most medical debtors had some health insurance, but many suffered gaps in coverage:
  • 77.9% of the individuals whose illness led to bankruptcy had health insurance at the onset of the bankrupting illness; 60.3% had private insurance.
  • 69% of debtor families had coverage at the time of their bankruptcy filing
  • 60% of families had continuous coverage
  • Only 0.3% of the uninsured went without coverage voluntarily, i.e. because they though they didn’t need it – most others couldn’t afford it.
And still people line up to demand that the great United States of America preserve its 37th best health care system in the world.

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