Medical bills prompt more than 60% of U.S. bankruptcies

[CG51]

This year, an estimated 1.5 million Americans will declare bankruptcy. Many people may chalk up that misfortune to overspending or a lavish lifestyle, but a new study suggests that more than 60 percent of people who go bankrupt are actually capsized by medical bills.Bankruptcies due to medical bills increased by nearly 50 percent in a six-year period, from 46 percent in 2001 to 62 percent in 2007, and most of those who filed for bankruptcy were middle-class, well-educated homeowners, according to a report that will be published in the August issue of The American Journal of Medicine.

"Unless you're a Warren Buffett or Bill Gates, you're one illness away from financial ruin in this country," says lead author Steffie Woolhandler, M.D., of the Harvard Medical School, in Cambridge, Mass. "If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that's the major finding in our study."

Woolhandler and her colleagues surveyed a random sample of 2,314 people who filed for bankruptcy in early 2007, looked at their court records, and then interviewed more than 1,000 of them.

Health.com: Expert advice on getting health insurance and affordable care for chronic pain (http://www.health.com/health/condition-article/0,,20189593,00.html)

They concluded that 62.1 percent of the bankruptcies were medically related because the individuals either had more than $5,000 (or 10 percent of their pretax income) in medical bills, mortgaged their home to pay for medical bills, or lost significant income due to an illness. On average, medically bankrupt families had $17,943 in out-of-pocket expenses, including $26,971 for those who lacked insurance and $17,749 who had insurance at some point.

Overall, three-quarters of the people with a medically-related bankruptcy had health insurance (http://topics.cnn.com/topics/Health_Care_Costs), they say.

"That was actually the predominant problem in patients in our study -- 78 percent of them had health insurance, but many of them were bankrupted anyway because there were gaps in their coverage like co-payments and deductibles and uncovered services," says Woolhandler. "Other people had private insurance but got so sick that they lost their job and lost their insurance."

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However, Peter Cunningham, Ph.D., a senior fellow at the Center for Studying Health System Change, a nonpartisan policy research organization in Washington, D.C., isn't completely convinced. He says it's often hard to tell in which cases medical bills add to the bleak financial picture without being directly responsible for the bankruptcies.

"I'm not sure that it is correct to say that medical problems were the direct cause of all of these bankruptcies," he says. "In most of these cases, it's going to be medical expenses and other things, other debt that is accumulating."

Either way, he agrees that medical bills are an increasing problem for many people.

Health.com: 5 quick ways to stop back pain (http://slideshows.health.com/slide_shows/10277/slides/10866)

"I think medical bills are something that a lot of families are having a lot of difficulty with and whether it's the direct cause of bankruptcy or whether it helps to push them over the edge because they already were in a precarious financial situation, it's a big concern and hopefully that's what medical reform will try to address," he says.

The study may overestimate the number of bankruptcies caused by medical bills yet underestimate the financial burden of health care on American families, because most people struggle along but don't end up declaring bankruptcy, according to Cunningham.
"Bankruptcy is the most extreme or final step for people who are having problems paying medical bills," he says. "Medical bills and medical costs are an issue that can very easily and in pretty short order overwhelm a lot families who are on otherwise solid financial ground, including those with private insurance."

Health.com: Where to find money to pay for your major health bills (http://www.health.com/health/condition-article/0,,20231992_1,00.html)

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MayoClinic.com: Health A - Z (http://www.cnn.com/HEALTH/health.a.z/)

His group's research found that medical bills unduly stress 1 in 5 families.
Either way, the high cost of health care is a problem that's probably getting worse for people in the United States, particularly since the economic picture (http://topics.cnn.com/topics/National_Economy) became grimmer after the study was conducted.

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"The recession didn't happen until a year after our study," says Woolhandler. "We're quite sure that the problem of bankruptcy overall is worse, the numbers have been soaring, and the number this year is expected to be higher than it was before Congress tightened bankruptcy eligibility in 2005."

In 2005, bankruptcies peaked at two million filings.


http://www.cnn.com/2009/HEALTH/06/05/bankruptcy.medical.bills/index.html

[marktigger]

Maybe a national system free at the point of delivery paid for out of general taxation would be a good idea?

[muck]

Kinda ironic: In the US, medical bills financially ruin the people and over here in Europe, they financially ruin the nations.

[Danik]

While we are on the subject...

What have our greatest(American) mpnet members discovered as the best option for their healthcare in terms of insurance, deductibles, HSAs, etc.?

[martinexsquaddie]

Maybe a national system free at the point of delivery paid for out of general taxation would be a good idea?

no no no thats evil commie talk

America has a Ferrari of a health system.
An engineering marvel thats the envy of the world.
unfortunately it only seats two and very few people can afford it.

NHS is by contrast an old routemaster bit scruffy looking not terribly marvelous but everybody can afford it and there's seats for most people ok a few people have to stand but everybody gets where there going.

[Ordie]

The problem here in the US is that health care is tied with employment.

If there were an alternative universal system, GM and other businesses would not be in a dire situation as it is today.

[hell]

I think our current problem is due to excessive costs. Fees for most medical services outside of a general practitioner's office visit are insane. Just look at how much LPNs ane RNs make. I understand they are essential, but a lot of them do menial work, and start out at $40+K per year.

To me, pretty much any talk of any healthcare system, whether universal, opt-in, or whatever, is pointless. Several large corporations manage what healthcare insurance options are available. They are allowed to deny treatment for little reason, and like other branches of the insurance industry, they regularly deny people for things that should obviously be covered. All of the current propositions to "fix" the healthcare system are crap; they are nothing but a band-aid to help stop the hemorrhaging.

Insurance companies have a huge amount of capital. They have entire legal departments dedicated to fight sick people in long, drawn out court cases. They have lobbyists with direct access and huge amounts of funding for "donations" to politicians. Take the monopoly away from those companies, and let politicians review information and pass legislation according to what will benefit the population, not corporations. That's the fix, and it isn't going to take place. I don't care what president or party is in power, nothing that will be passed into law will be a fix. It's going to be an economic sinkhole similar to social security; one where things may work OK for the interim, but decades after the politicians have retired, the program will become insolvent.

Ok, I've ranted for the nth time about healthcare, I feel better.

[Blue_0]

Overall, three-quarters of the people with a medically-related bankruptcy had health insurance (http://topics.cnn.com/topics/Health_Care_Costs), they say.

So in other words, even if you have health insurance it doesn't do you any good. Welcome to the American health system!

-- Bluelight

[Bulletproof]

A national system could be a solution, but it's far from being perfect and you have to pay for it. We still have a lot of people going bankrupt because of an illness, they can't work and pay their stuff.

[Delay]

A national system could be a solution, but it's far from being perfect and you have to pay for it. We still have a lot of people going bankrupt because of an illness, they can't work and pay their stuff.

Can you provide a source or some numbers on these bankruptcy

[Britboy]

Can't these people claim for govt medical aid if their insurance won't cover a condition or if it runs out or they lose a job? Medicare?

Or is it means-tested? Are you forced to spend your savings before you can ask for aid?

Even so, you'd think you could keep a proportion of your savings and still get aid, you would probably lose a bit of cash but shouldn't have to bankrupt yourself to get medical attention.

[JJC]

I had a thyroid test done not long ago that cost me several thousand dollars. I cut back on eating and hanging out for months to pay this bill. I can't imagine getting seriously ill in life.

[PeterRJG]

Can't these people claim for govt medical aid if their insurance won't cover a condition or if it runs out or they lose a job? Medicare?

Or is it means-tested? Are you forced to spend your savings before you can ask for aid?

Even so, you'd think you could keep a proportion of your savings and still get aid, you would probably lose a bit of cash but shouldn't have to bankrupt yourself to get medical attention.

When I lived in the US, you could get Medicaid if your job didn't offer insurance and you earned under a certain threshold. I think there were exemptions if you were pregnant as well.

[Blue_0]

Can't these people claim for govt medical aid if their insurance won't cover a condition or if it runs out or they lose a job? Medicare?

Or is it means-tested? Are you forced to spend your savings before you can ask for aid?

Even so, you'd think you could keep a proportion of your savings and still get aid, you would probably lose a bit of cash but shouldn't have to bankrupt yourself to get medical attention.

No. I have been sick without insurance and what I received was an automatic loan. I believe you can get something called S-Chip for minors, but not for an adult. In some states there are low income insurance assistance programs, but that varies state to state.

Also, in the US if you do not have money to pay, the automatic loan they give you does not cover expensive procedures. If you had the money they could rebuild your leg after and accident, but if you do not have the money they will simply cut it off. You live both ways, so the hospital has settled its legal obligation. (if you force me to, I might be able to find examples of this, but I would rather not)

The same applies to mental health issues. Typically a mental health patent will only receive treatment while he is in prison, simply because while in prison the state is respocible for him. After being released from prison typically mental health patients no longer are able to buy meds / etc after release, commit a some sort of crime, and are sent back to prison.

I would argue that if you get sick in the developed world, the United States is the worse place you could be. Unless of course your Bill Gates.

-- Bluelight

[Britboy]

No. I have been sick without insurance and what I received was an automatic loan. I believe you can get something called S-Chip for minors, but not for an adult. In some states there are low income insurance assistance programs, but that varies state to state.

Also, in the US if you do not have money to pay, the automatic loan they give you does not cover expensive procedures. If you had the money they could rebuild your leg after and accident, but if you do not have the money they will simply cut it off. You live both ways, so the hospital has settled its legal obligation. (if you force me to, I might be able to find examples of this, but I would rather not)

The same applies to mental health issues. Typically a mental health patent will only receive treatment while he is in prison, simply because while in prison the state is respocible for him. After being released from prison typically mental health patients no longer are able to buy meds / etc after release, commit a some sort of crime, and are sent back to prison.

I would argue that if you get sick in the developed world, the United States is the worse place you could be. Unless of course your Bill Gates.

-- Bluelight

Thats messed up. The loss of a leg for the sake of some cash. Supposing the guy doesnt have the money to buy some decent prosthetics afterward as well, that sucks even more.

The armed forces must be one of the few places in the US where you are guaranteed medical treatment then.

[Policía Loco]

I would like to know the lifestyles associated with some of these people.

[Bulletproof]

Can you provide a source or some numbers on these bankruptcy

No, but I'm working for a trustee. The illness is a reason that come back often.

[V.I.D.]

I think our current problem is due to excessive costs. Fees for most medical services outside of a general practitioner's office visit are insane. Just look at how much LPNs ane RNs make. I understand they are essential, but a lot of them do menial work, and start out at $40+K per year.


As an RN (BSN degree) who worked his butt off during the college years, and takes pride in his work & treats each patient with highest degree of professionalism, I can only hope you tell this to the first RN you come in contact with next time you get sick or hospitalized.

BTW, my employer pays me and my co-workers significantly more than the amount you stated and I'd dare to say it still does not pay us fairly comparing to the amount of workload/stress vs. MDs' jobs here.

[King of the Grey]

just out of curiousity, how much does it cost for medical treatment in the states? For general sickness (flu, cold, swollen knee) consultation fees is set at HKD 200 in private doctors, public healthcare is much cheaper obviously.

what should we use as standards for comparisons?

[XShipRider]

The problem here in the US is that health care is tied with employment.

If there were an alternative universal system, GM and other businesses would not be in a dire situation as it is today.

We've already seen Medicare/Medicaid system in action. Medicare has driven the cost of healthcare through the roof. If you've ever seen an EOB from a Medicare recipient you would see how doctors and hospitals have to inflate prices skyhigh just to get paid anything near actual cost. What makes everyone think universal healthcare would be any better for doctors/hospitals? I would think universal healthcare will drive the best and brightest out of the business completely because financial reward would be significantly curtailed under that type system.

Dr. Healer pondering, "Let's see... 16 hour days fixing bodies and I get 5X minimum wage... Yep, definitely worth it. Buy hey, I don't have to worry about that pesky malpractice insurance anymore. I'm in!"

Much of our problem lies in the choices we make as adults. Since obesity is a major factor in healthcare it would stand to reason that if we took better care of ourselves many of our maladies would simply go away. Not all, but many would indeed be non-factors or lesser factors. With universal healthcare, how long does anyone think it would be before Uncle Sam is telling you what you can and cannot consume? How often you need to exercise? Would doctors have the choice of not seeing people based on their lifestyle or culinary (using the term loosely) choices?

Under a universal healthcare system say goodbye to the Cleveland Clinic, one of the top cardio care hospitals in the world. Why? The reason they succeed is competition. Under a universal system they would simply stop innovating because in a competitive environment the payoff to risk is gain. If there is no financial gain there are far fewer willing to take the risk of a new procedure. Oh there would still be some scientific advances here and there but the majority of research is to patent a new procedure or product for -- do you see this coming? -- financial gain.

There is a reason people come from around the world to the Cleveland Clinic. Oil sheiks, movie stars, the rich and famous - they all come to the Clinic for cardio care. Ask Robin Williams, he was recently a patient. He didn't come here because it was cheap.

[JKD]

Frontline did a show about this not long ago called Sick Around America. Worth watching
http://www.pbs.org/wgbh/pages/frontline/sickaroundamerica/view/

[hell]

As an RN (BSN degree) who worked his butt off during the college years, and takes pride in his work & treats each patient with highest degree of professionalism, I can only hope you tell this to the first RN you come in contact with next time you get sick or hospitalized.


I've basically done this several times before; I usually chat them up, then ask things along the line of income. A few don't mind talking about it, others don't want to. I've asked different nurses what they do for the most part, and then base my outlook on that with what they say they make, if they say anything at all. I've encountered general duty, ICU, Physician's Assistants, and a few others.

I'm glad that you worked hard while you were in school, and I'm much happier to hear that you treat patients well (no, I'm not being condescending). I've run into more callous, cold, and uncaring medical personal than I care to count. From what I understand, that's an acquired trait, one used to stay calm and keep your cool during stressful events, but I'm getting way off-topic.



BTW, my employer pays me and my co-workers significantly more than the amount you stated and I'd dare to say it still does not pay us fairly comparing to the amount of workload/stress vs. MDs' jobs here.

While it's nice to get paid well for working hard, it still doesn't rationalize large salaries for me in the bigger picture. Not just your role, but the field as a whole. Most of my money that goes to any doctor I see (out of pocket in addition to insurance-covered costs) appears to just cover time and paperwork that they have to put in ****ering with my insurance company.

If massive medical costs were a direct requirement for receiving adequate care, then hospitals wouldn't be settling with people who owe thousands of dollars. You know there's massive bloat and greed when you can get a hospital to reduce a huge balance and take whatever they can get from someone who doesn't have the cash to pay the initial total.

Sorry if I offended you, but I'm still sticking to my idea that the medical profession as a whole pays too much for most jobs. Sure, some people have a direct role in saving your life in an emergency, but paying someone like a phlebotomist a large salary just seems wrong.

[V.I.D.]

@ Hell:
I see your point now and I can agree with a lot of what you're saying here. The earlier post bothered me as it appeared you were singling RNs as the "overpaid" sector of the health care. There are approx. 2,600,000 RNs in this country. Some are amazing at what they do and some I would not let take care of a stray dog. Sadly, I have had the "honor" of working with some from the latter category and I certainly understand where you're coming from. There are no hard feelings on my part.

In regards to general salaries, I could make a case that most MDs are being significantly overpaid, especially as the new concepts/professionals in the US health care, for example - Doctor of Nursing Practice (in Psychiatry, General Practice, etc.) are qualified and can do the same exact thing for three to four times less money. I am talking about the difference of several hundred thousand dollars/yr. saved. Yet, the ages-old, ingrained idea that "only MD is a real doctor" will maintain an obstacle to the health care progress.

However, the ultimate issue here is that the US health care is being run like a typical business and left to insurance companies to deal with. Hence, the overpriced services, big medical bills, and the feeling of being doomed if you can't afford good insurance. Show me how to solve this problem and I'll nominate you for Nobel prize for medicine.

[hell]

I definately agree on the MD aspect. I've experienced some health problems recently, and almost all specialists I've seen just go "I dunno, that's weird, I'm referring you to an X", where X is a different type of specialist. It not only shakes your faith in highly-trained specialists, it also makes me question why the hell MDs get paid so much. It's become obvious to me that being accepted to and completing medical school apparantly isn't nearly as difficult as I had imagined. Again, no slight to your profession V.I.D., but there are too many ignorant MDs out there for medical school to be as difficult as its portrayed to be.

(Disclosure notice: I work in IT, which has several different areas of expertise, similar to medicine, and we suffer from the same problems in regards to pay.)

I've bandied around different ideas on fixing our healthcare system, something I'm entirely unqualified to do. One problem I kept running into was a desire to regulate, which, in the past, has actually driven prices up for good and services in other areas.

I still think the solution lies in Standard Operating Costs being outlined, as well as regulated sets of defined procedures.

For example, while I understand different hospitals have different equipment and staff, things like MRIs, CTs, bloodwork, and other common tests need to have a set price, and there should be documentation on cost to support it. That MRI costs $2,200? Ok, show me the math that supports that figure.

As far as the defined procedures, I think many steps could be documented and regulated. For example: You have abdominal pain, and a doctor can't diagnose the cause without test(s). Something similar to a SOP should define different tests that would help diagnose the problem in this case, and the doctor could select the needed test(s) and not have to seek permission from the insurance company beforehand. Yea, I know outlining a step by step for every type of problem would be daunting, but I think once something like that was in place, it would help prevent insurance companies from denying requests. And yea, I know special circumstances would have to be outlined as well.

I haven't even tried messing with the legislation end of it, but laws would be needed to protect the patient's interest, not the insurance company's profits.

Looks like I'm going to be working on this idea for a long time before I get my Nobel prize, eh? Oh well, I can't botch things any worse than they currently are.

[Noble713]

While we are on the subject...

What have our greatest(American) mpnet members discovered as the best option for their healthcare in terms of insurance, deductibles, HSAs, etc.?

1. Enlist in the Active Duty military.
2. Get out and go to the VA.

$8 prescriptions. Everything else seems to be free. Granted, the most major work I've had done is the removal of wisdom teeth, so I don't know how well this will hold up if I get cancer, or a gangrenous limb, or some other crazy ailment. Nor do I think it's a solution for the whole country, but for a small user base like veterans it seems to perform well.

Still, I bet you could make recruiting advertisements about this benefit:

"Don't want to rely on Medicare as you age? Join the Army! Service Guarantees Healthcare!"

[brainplay]

You know there's massive bloat and greed when you can get a hospital to reduce a huge balance and take whatever they can get from someone who doesn't have the cash to pay the initial total.

Actually they do the same thing with loans. If there is little chance of getting their money they try to get at least a fraction to pay off the bare minimum to the collection agency and other fees.


However, the ultimate issue here is that the US health care is being run like a typical business and left to insurance companies to deal with.

I don't know what kind of "typical" business you're talking about and I doubt you do either. If the health care industry was run like a typical business we'd see commercials advertising hospital specials, membership card (like you see at Randalls or Kroger), coupons, discounts for bringing in new members, and free prostate exams included with each annual checkup.

You can't run a business like a business when you have so many social initiatives and regulation that even a Wall Street banker would blush.

[tyovan]

Nobody has mentioned malpractice as driving up the costs of healthcare either.

Doctors order many procedures, some of them extremely expensive, simply because there is the remote possibility that the test may have been needed. They have to practice defensive medicine, ordering almost everything under the sun, to cover their own ass. If they didn't think the procedure was necessary, or relevant, they still order it. Because if there is that remote possibility they were wrong, they could be faced with a massive malpractice suit.

Granted, there are some doctors that need to be stripped of their licenses and sued for every penny. But there are far too many frivolous malpractice lawsuits.


What really pisses me off in the health care industry, is the widespread corruption conducted by pharmaceutical companies. Corrupt to the core. How many billions and billions do they spend per year in campaign contributions and in 'educational' dinners hosted at expensive restaurants for doctors??


Lastly - for those of you bitching about inflated doctors salaries: some of them do earn too much. And there is FAR too much of an old boy network. Ex - An Infectious Disease specialist earns about $150K per year. However, he has the supplementary position of being the Internal Medicine Residency Program Director. His additional position, which he puts extremely minimal effort into, earns him an additional $150K per year.

Contrast this with my wife - a 3rd year internal medicine resident. She works 70-80, sometimes more, hours per week. Sometimes she is on call, working in the hospital, for 30 hours straight. She rotates through the different departments monthly - cardiology, ER, ICU, toxicology, neurology, etc, etc...
Do you know how much she makes???

A whopping $47K per year.

Some doctors are extremely overpaid, but lets not forget some are conversely extremely underpaid.

[XShipRider]

1. Enlist in the Active Duty military.
2. Get out and go to the VA.

$8 prescriptions. Everything else seems to be free. Granted, the most major work I've had done is the removal of wisdom teeth, so I don't know how well this will hold up if I get cancer, or a gangrenous limb, or some other crazy ailment. Nor do I think it's a solution for the whole country, but for a small user base like veterans it seems to perform well.

Still, I bet you could make recruiting advertisements about this benefit:

"Don't want to rely on Medicare as you age? Join the Army! Service Guarantees Healthcare!"

You have to remember, many veterans give an arm or a leg, literally, to earn that lifetime healthcare. The rest at least offered to give that arm or leg. Attempting to scale something similar to the rest of the populace, who would have to sacrifice nothing in most cases, would not work as well.

I think 26.5M veterans is a pretty good chunk of people (roughly 8.8% of the gross population).

But your point was not lost on me.


Nobody has mentioned malpractice as driving up the costs of healthcare either.

Doctors order many procedures, some of them extremely expensive, simply because there is the remote possibility that the test may have been needed. They have to practice defensive medicine, ordering almost everything under the sun, to cover their own ass. If they didn't think the procedure was necessary, or relevant, they still order it. Because if there is that remote possibility they were wrong, they could be faced with a massive malpractice suit.

Granted, there are some doctors that need to be stripped of their licenses and sued for every penny. But there are far too many frivolous malpractice lawsuits.

Agreed. Tort is an issue thanks to our magnificent legal system. Lawyers have convinced much of the populace that Party B must pay for the natural death of Party A. Of course, only the procedure at hand comes into play not the fact that Party A was carrying an extra 50-100 lbs for over 30 years, consumed massive amounts of alcohol over that time, imprinted permanent cheek prints in his favorite easy chair, ate almost zero balanced meals in any given month, snacked on potato chips rather than fruit, drank sugar based soft drinks instead of water, et cetera, you get the point.

Even Jim Morrison knew - no one gets out alive (he just accelerated the process a bit).