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Thursday, June 4, 2009

Medical Costs Cause More Bankruptcies; Insurance Companies Take Money and Run

While some nameless conspirators agitate against "socialized medicine" (and can't even put their opposition in complete sentences—check the stop sign), medical bills are involved in 62.1% of personal bankruptcies in America. That's an increase of 50% in six years. And don't think those bankruptcies can be blamed on lazy, irresponsible people: 75% of those medical debtors were paying for health insurance, and most of them were well-educated, working, middle-class homeowners.

The report, issued by researchers from Harvard Law, Harvard Med, and Ohio U., found that "a quarter of firms cancel coverage immediately when an employee suffers a disabling illness; another quarter do so within a year." Hmm... an insurance system that provides coverage only until you actually need it... sounds like the definition of dysfunctional.

Single-payer health insurance advocate Dr. David Himmelstein says it best: "Unless you're Warren Buffet, your family is just one serious illness away from bankruptcy."


  1. When you read the entire report, while medical bills were "part of" the expenses listed in 61% of bankruptcies (that makes sense), "only 29% directly blamed medical bills for their bankruptcy".

    The larger issue in the report is that, "62% had lost income due to illness" which is the reason health insurance companies cancel policies. No payment, no coverage. If you lose your job because you can't work anymore, you lose your health coverage unless you can afford expensive Cobra rates.

    The illnesses listed that caused a loss of income were debilitating illnesses like MS, heart attacks, strokes and others that don't allow you to work and produce income.

    Health Insurance companies can't simply cancel you because you become ill in most cases. The real problem this report addresses is that when you suffer an illness that causes you not to be able to work, companies are cancelling coverage because premiums are not paid.

    Perhaps, instead of overhauling our entire system, some sort of Federal safety net should be available that picks up all or part of those insurance premiums when workers become unable to work, for a period of time.

    Something that bridges the gap between earning an income with health insurance, or becoming penniless so you qualify for Medicaid.

  2. this is a bad reflection for the insurance industry and needs to find a solution to avoid such situations.

  3. "bridging the gap"—that gap still shows a pretty serious dysfunction, one that doesn't exist in Canada, where receiving health care isn't contingent on your ability to keep going to work each day to bring home a paycheck.

    Build a public health coverage system for everyone, put back that 10% or more of family income the article mentions, and you'll give a lot of those families the wiggle room they need to stay out of bankruptcy.


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