Majority of personal bankruptcies tied to medical bills, study says


Jun. 5--The cost of health care continues to burden Americans in alarming numbers, with 62 percent of all personal bankruptcies in 2007 blamed on unaffordable medical bills, according to Harvard and Ohio University researchers.

What's more, three-fourths of those debtors had health insurance, according to a study to be published in August in the American Journal of Medicine. The study notes that more people are mortgaging their homes in a failed attempt to pay their medical bills.

The report could further underscore the urgency behind policymakers' efforts to overhaul the country's health care system. Congress has begun drafting what health care advocates hope will be comprehensive legislation that addresses the high cost of medicine and diminishing access to quality health care, particularly among the poor and uninsured.

"In 2007, before the current economic downturn, an American family filed for bankruptcy in the aftermath of illness every 90 seconds; three-quarters of them were insured," the study said. The study was conducted by researchers from Harvard medical and law schools, Cambridge Hospital and the Department of Sociology at Ohio University.

Researchers found that 62.1 percent of the bankruptcies they surveyed stemmed from medical reasons. That's up from the 46 percent a similar Harvard study found in 2001, when researchers culled bankruptcy filings in five states.

Since then, health costs and the ranks of the uninsured and underinsured have grown, the researchers said. Meanwhile, bankruptcy laws have tightened.

Jonathan Stein, an Elk Grove attorney who helps clients navigate foreclosures and bankruptcies, said that catastrophic medical bills no longer are the leading reasons people go broke.

"It seems to be the more routine (medical) things that are getting people into trouble," he said.

Stein warned that things could get worse if the state cuts its health services safety net because of budget troubles. "California is about to make a bigger problem," he said.

A spokesman for America's Health Insurance Plans, the trade group for the country's health insurers, took exception to the study. Insurance costs reflect the high cost of medicine, said spokesman Robert Zirkelbach.

"We have to look at what's really driving health care costs," said Zirkelbach, who cited the high cost of medical technology and pharmaceuticals as among factors challenging his industry and consumers.

Critics say the study exaggerates the problem and question its broad use of the term "medical related" to inflate the problem of medical debt.

The authors relied on a national sample of 2,314 U.S. Bankruptcy Court records filed in 2007 and interviews with 1,032 of those who filed for bankruptcy protection.

The key findings:

-- 62.1 percent of all bankruptcies have a medical cause.

-- Most medical debtors had health insurance, were well-educated and were middle-class.

-- Insolvency attributable to medical problems rose by 50 percent between 2001 and 2007.

The study could energize critics of a health care system that they say fails to serve millions of Americans. By some counts, about 46 million Americans are uninsured.

"It tells us that our health system and our health insurance is failing us," said Elizabeth Landsberg, a legislative advocate for the Western Center on Law and Poverty, a health advocacy group.

"It almost calls into question whether medical insurance is protecting people against financial ruin. -- It should give us access to doctors and should prevent financial ruin."

The center advocates a single-payer system that would dismantle the system of private, for-profit health insurance companies.

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Call The Bee's Bobby Caina Calvan, (916) 321-1067.

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