78 Percent Of Bankruptcy Filers Burdened By Healthcare Expenses Had Health Insurance

In an update to their landmark 2001 study on medical bankruptcy, researchers at Harvard University have concluded that medical debt contributed to 62 percent of U.S. personal bankruptcies in 2007–78 percent of bankruptcy filers burdened by healthcare expenses had health insurance but “still were overwhelmed by their medical debt”:

For 92% of the medically bankrupt, high medical bills directly contributed to their bankruptcy. Many families with continuous coverage found themselves under-insured, responsible for thousands of dollars in out-of-pocket costs. Others had private coverage but lost it when they became too sick to work. Nationally, a quarter of firms cancel coverage immediately when an employee suffers a disabling illness; another quarter do so within a year. Income loss due to illness also was common, but nearly always coupled with high medical bills.

“The proportion of all bankruptcies attributable to medical problems has increased by 50%” since 2001, and is likely to grow even higher once the economic climate of 2008 is considered. Nationally, the percentage of Americans “under the age of 65 with employer sponsored insurance declined to less than 63 percent in 2007, from more than 67 percent in 1999,” and employers are now reporting that they plan to shift more health costs to employees.

Earlier this week, a new study published in Health Affairs concluded that “the 161 million Americans with employer-sponsored health insurance are facing substantial increases in out-of-pocket (OOP) costs.” In 2007, “adults with employer coverage faced an average of $729 annually in OOP costs for medical services,” a “34 percent increase from 2004. In fact, between 2000 and 2006, premiums for family coverage grew 6.4 times more quickly than workers’ earnings and average worker’s share of family health insurance premiums nearly doubled from 2000 to 2007.


All this is to say that health care reform isn’t just about extending insurance to the uninsured — it’s also about shoring up inadequate coverage. In other words, personal financial security requires health care reform — affordable, adequate, accessible coverage for all Americans. Health reformers must assure Americans with insurance that reform will secure their access to coverage and protect Americans and their families from a medical or financial catastrophe. After all, this study demonstrates that too many insured Americans are just one illness away from bankruptcy.