Medical Bankruptcy

My cyberfriend Casey over the weekend posted about Government Healthcare. It got me to thinking about how some people are forced to declare bankruptcy because of astronomical medical bills. Here are a few interesting thoughts from Harvard professor Elizabeth Warren who conducted a study on bankruptcy filings in 2001:
“As part of a research study at Harvard University, our researchers interviewed 1,771 Americans in bankruptcy courts across the country. To our surprise, half said that illness or medical bills drove them to bankruptcy. So each year, 2 million Americans — those who file and their dependents — face the double disaster of illness and bankruptcy.
“Every 30 seconds in the United States, someone files for bankruptcy in the aftermath of a serious health problem.” That adds up to well over 1 Million Americans that the study linked health issues with bankruptcy.
I think that the study is a bit dated and maybe the numbers are a bit different these days. Yet I think the issue is still a huge one.. people with a lack of insurance (no insurance or not enough insurance) are often faced with the reality of either not getting medical treatment or incurring a massive amount of debt. Here is what I commented at Casey's place:
I really don’t know what the right answer is but it saddens me to see folks have to declare bankruptcy because of medical bills. And what about folks that cannot get health insurance because of pre-existing conditions?

The govt already is mandated to cover things like dialysis (after the first year) and other health care when people are disabled. It seems that there should be some sort of accommodation for extenuating circumstances.
What do you think? Should the government assist with such cases? Should there be a bailout for such people? It begs the question of who is entitled to medical care.. just the well insured or rich?


  1. As I commented in my response, the problem is largely caused by the government as it controls 80% or so of health care spending already. Also, note that this is "the aftermath of a serious health problem." Many of these people took the risk of not getting health insurance because they thought they were healthy. Then reality hit. The question is then, should these people be allowed to opt out of health insurance in the first place, or should the state play nanny and force everyone to enroll?

    Remember that if you say yes, then you are opening the door for the government to tell us what to eat and drink as well. If the government is going to foot the bill for our health care costs then they will claim the right to tell us how to live.

    I can guarantee you it will happen, because it's already happening in Japan. People that are overweight are being fined and taking pay cuts if they do not lose weight. Certainly, if these people are more of a burden on the system, they should be paying more, but do we want this to be forced on us by the government?

  2. Casey, I am not sure of other states, but the state of Massachusetts already mandates that each individual must have medical insurance (private/not government). They are penalized through taxation for not having it. So far it has been an improvement in services for us. I am just now beginning to have access to the specialists and naturopathic physicians I need.

    Bob, I guess I don't understand this. Several years ago, after a layoff and two pregnancies that wiped us out, my husband had to have an emergency appendectomy at a county hospital. After talking to the billing department, we were turned down for assistance and attempted to make small weekly payments ($10/wk if I remember correctly). After two months, they wrote us a letter that forgave us the debt. I always assumed this was the typical response to those who made an attempt to act responsibly - maybe not??

  3. Casey, I have some experience with Medicare controlled costs and physicians and other services are reimbursed MUCH less than what is billed. One procedure I know of was billed at $25k and was reimbursed at $5K.

    On the flip-side the GOP passed RX plan excluded such govt negotiated rates and is simply a bad plan because RX manufacturers have only the free market and prey on the needs of those who are sick.

    To me it is an issue of caring for the poorest amongst us.

  4. Missy, apparently (from the stats) not all hospitals and medical providers are as generous as those you encountered.

    A friend that I know of was struggling with about $50k of bills.. they had insurance but the costs were so high that everything was not covered when his wife had a medical crisis.

    Think about it.. if you are responsible for 10% of the costs (and have no max on your deductible) your costs can be pretty outrageous on a $1m crisis.

  5. I don't understand why people go bankrupt over medical expenses.
    I mean I thought your bills go to a collection agency where you can work out deals and very lenient payment plans.
    Or does it work another way with major expenses?

  6. Health care definitely needs help, but letting the government in more will create loss of life. I've lost friends overseas who were on waiting lists. Canadians are wondering where they will go for help if America turns into government controlled health care. Medicare and Medicaid are awful...what do we think will happen if the government takes it all over?
    When I had my first baby, I received a big bill for my share after insurance. I paid half to the hospital, and they immediately turned it over to a collection agency that gave me grief. My dad helped me out there, and I paid him back...but he gave the hospital finance department a bit of a lecture. In good faith I was attempting to pay the bill.
    There are two huge and great hospitals here in the metroplex where people can go for free health care. Illegals even get free health care.

  7. Bob, can't that problem be mitigated with wider availability of generic drugs? I definitely think it is the government involvement that is driving up prices. One article I read said that we already pay twice as much as Canadians for health care. Our government, while possibly good-intentioned, is incompetent. I don't trust them to do anything but make the situation worse.

  8. This comment has been removed by the author.

  9. My experience is quite different from Karen's. I hear a lot of Americans say those kinds of things about Canadians and other Western countries, but in my personal experience, I have found these things to be common myths.

    I live near the border, have dual citizenship, work and have extended family in Canada. No Canadians I know go to the states for health care. (I'm not saying there aren't any. I've just never heard of it. And I know a lot of Canadians). Even the dentist is cheaper in Canada.

    The problem is that this issue is way too politicized. People get passionate about their "position" on the issue, and generally can't hear another perspective. I also have friends in the UK who complain about their health care system, but always tell me they prefer it to ours any day. So my personal experience is different.

    We are considering moving back to Canada because of the security issue of health care. We don't want to end up losing everything if something goes wrong with our health. And we just can't afford the costs of insurance here. I know a lot of people who can't.

    Millions of Americans don't have insurance - and I don't think irresponsibility is always the reason. It's really expensive! But a lot of people understand that they could be ruined financially if something went wrong. So, if they still aren't getting insurance, then it may because they simply cannot afford it. It's too simplistic to just to write all these people off as "irresponsible."

    But, just because I prefer Canadian universal healthcare to the current American situation... doesn't mean I'm opposed ideologically to private health care. I just think there ought to be some accountability.

    When people fall ill, especially with treatable, but potentially fatal conditions; that creates a vulnerability and desperation. If left entirely to "the invisible hand of the market," that creates a skewed power relationship between the sick and the health care providers and drug manufacturers. How much is your life worth? What price would you put on it?

    The potential for abuse and excessive profit margins is almost endless. (I remember a whistle-blower from a health insurance company testifying about getting bonuses and incentives for consistently denying claims. That kind of company policy is pure greed.) Somebody has to hold them accountable, so I'm not opposed to regulation in that direction.

    There is definitely an ethical element to this that gets ignored by the far, far right. I don't get how depending on Adam Smith, and Keynes, and their ideologies about the market - how any of that is automatically "Christian" (at least in this country). We're following Jesus, not Smith and Keynes. And definitely not Marx. (Sorry for the length of my comment)

  10. Here's a horror story from Canada:

    Also, the Canadian government apparently spends $1 billion annually for Canadians to receive medical treatment in the United States.

    Obviously, there are problems with our system. However, I think we need to look at solving the root problems rather than just dumping one failed system for another. Socialized medicine does not reduce the cost of medicine, it just allows the government to decide who gets it. Do we trust the government to make that decision fairly? Who wants to bet against the prediction that politicians and celebrities will get favored treatment while everyone else is put on waiting lists?

    Here's one doctor's suggestion for curing our problem with capitalism instead of socialism:

  11. I appreciated your eyewitness account Sarah. So much of what we (myself included) all know about this is based on anecdotal information.

  12. Watched a show on our ABC the othernight bit like your PBS I think - about Medical Bankruptcy - "wife's cancer cost us all we ever worked for but atleast she's alive."

  13. and it still never ceases to amaze me how many people are either denied medical care or just will not go and get help because they feel they are not going to get the best of help anyways due to the sole fact that they have no coverage. I have experienced this firsthand and second hand and it is very depressing.


I love to get comments and usually respond. So come back to see my reply. You can click here to see my comment policy.