62% of Bankruptcies Are Medically Induced
Everyone, insured, uninsured, or under-insured should read the front page story from yesterday’s Arizona Republic entitled “Buried in Bills.” An online version of the article is available here.
The article addresses points that I have blogged about before; namely that 1/3 of Americans have medical debt, and that in 2007, about 62% of all bankruptcies filed were medically related. Of those 62% of bankruptcies, a full 3/4 of the filers had medical insurance.
In my office, I see all types of bankruptcies, but it is truly rare to see someone filing who does not have any medical debt. Some people end up in debt because of chronic illness and others are thrown into debt because of unanticipated occurrences, such as a car accident. Because health care is often tied to employment, when people are injured and can’t work they are often forced to leave their jobs. Eventually, the employer-paid health care runs out and the typical person enters the market for private insurance only to find that their pre-existing conditions are not covered.
While bankruptcy may be an option for some people, I am always worried that the powerful forces in Congress will simply rewrite the Bankruptcy Code to make filing even harder or to make medical debt non-dischargeable. That is exactly what happened when people started to use bankruptcy to get out of their student loan obligations thirty years ago. Now, due in large part to the bank lobby, it is almost impossible to get rid of student loan debt in a bankruptcy. Will medical debt be next?