You’re One Illness Away From Bankruptcy

Crushing medical bills were the major cause of 62 percent of all personal bankruptcies in 2007. Even worse—75 percent of those with medical bill-related bankruptcies had health insurance.

More bad news: The percentages cited above were based on data collected before the nation’s economy began its long nose dive.

Says one of the study’s authors, David Himmelstein, an associate professor of medicine at Harvard Medical School:

Unless you’re a Warren Buffett or Bill Gates, you’re one illness away from financial ruin in this country. 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.

The U.S. health care financing system is broken, and not only for the poor and uninsured. Middle-class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.

Researchers from Harvard and Ohio University published the study in the American Journal of Medicine.

In the AFL-CIO’s 2009 Health Care for America Survey, thousands of the more than 23,000 respondents cited the burden of high medical costs, even with insurance coverage, as a major problem facing working families. The survey’s full findings will be released later this month.

In the bankruptcy cases studied, hospital costs accounted for nearly half the medical expenses (48 percent), followed by prescription drugs (18.6 percent), doctor bills (15.1 percent) and insurance premiums (4.1 percent). Medical equipment and nursing home care rounded out the list. Says Himmelstein;

For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments and deductibles that illness can put you in the poorhouse. And even the best job-based health insurance often vanishes when a prolonged illness causes job loss—precisely when families need it most.

One of the key elements of health care reform backed by President Obama and the AFL-CIO is inclusion of a public health insurance option to enable workers and families who either have private insurance coverage or no coverage to choose between private or public insurance plans. It has been vigorously attacked by the private insurance industry and most congressional Republicans.

Deborah Thorne, associate professor of sociology at Ohio University and a co-author of the study, says medical costs leading to bankruptcy affect families

who have played by the rules of our economic system, and they deserve nothing less than affordable health care.

Click here to find out how you can join the fight for health care reform at one of thousand of events planned tomorrow at private homes or community centers nationwide.