New Study Links Majority of Bankruptcies to Medical Debt
Many consumers have a significant amount of debt that results in financial struggle and may lead to consumer bankruptcy. For numerous debtors, that debt is on credit cards and comes with high interest rates. For others, debt is tied more clearly to hospital bills, mortgages, student loans, and other costs. At the same time, however, it is important to recognize that all credit card debt is not tied to consumer purchases from retail establishments. Some consumers have credit card debt related to medical bills. According to a recent study conducted by the Consumer Bankruptcy Project and reported in a Truthout.org article, about two-thirds of all personal bankruptcies are tied to medical debt or debt from illness.
What does the information from this study tell us? In short, the data implies that the Affordable Care Act (ACA) has not reduced medical debt significantly enough to lower the rate of medical debt bankruptcies.
Prior to the passage of the ACA, more than 66% of bankruptcies were linked to medical debt. For example, consumers had substantial hospital bills associated with life-saving treatments, such as cancer treatment or surgeries, that resulted in tens of thousands of dollars of debt that had become insurmountable. In theory, the ACA should have changed the rate at which medical debt results in consumer bankruptcy. In other words, the ACA should have resulted in fewer consumers having to take on so much medical debt simply in order to be healthy.
Yet the Consumer Bankruptcy Project examined more than 900 consumer bankruptcies filed between 2013 and 2016—several years following the 2010 passage of the ACA—and determined that “66.5% of the bankruptcies were brought about by medical bills families were unable to afford or income loss due to illness.” The American Journal of Public Health reports that “about 530,000 American households continue to see their finances wiped out each year due to medical costs.”
Dr. David Himmelstein, the lead author of the study, explained that most Americans are “just one serious illness away from bankruptcy,” and that only the wealthiest Americans actually can afford life-saving medical treatment. For most people who are firmly within the middle class, health insurance policies simply are insufficient to prevent substantial medical debt in the event of a medical emergency or long-term illness. Indeed, most health insurance policies require copays, deductibles, and other costs. As such any kind of “prolonged illness” leads individuals and families to owe significant amounts of money to hospitals and other healthcare providers, not to mention the cost of lost wages associated with a long-term illness.
While the ACA did result in many more Americans have health insurance coverage, consumer advocates suggest that more needs to be done to ensure that healthcare costs never lead to bankruptcy.
Do you have questions about filing for bankruptcy in Oak Park? An experienced Oak Park bankruptcy attorney at our firm can discuss your case with you. We have years of experience advocating for consumers and can help you to understand options that may be available to you. Contact the Emerson Law Firm to learn more.
See Related Blog Posts:
U.S. Supreme Court Will Consider Collection Actions Against a Bankruptcy Debtor
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What does the information from this study tell us? In short, the data implies that the Affordable Care Act (ACA) has not reduced medical debt significantly enough to lower the rate of medical debt bankruptcies.
History of Medical Debt and Bankruptcy
Prior to the passage of the ACA, more than 66% of bankruptcies were linked to medical debt. For example, consumers had substantial hospital bills associated with life-saving treatments, such as cancer treatment or surgeries, that resulted in tens of thousands of dollars of debt that had become insurmountable. In theory, the ACA should have changed the rate at which medical debt results in consumer bankruptcy. In other words, the ACA should have resulted in fewer consumers having to take on so much medical debt simply in order to be healthy.
Yet the Consumer Bankruptcy Project examined more than 900 consumer bankruptcies filed between 2013 and 2016—several years following the 2010 passage of the ACA—and determined that “66.5% of the bankruptcies were brought about by medical bills families were unable to afford or income loss due to illness.” The American Journal of Public Health reports that “about 530,000 American households continue to see their finances wiped out each year due to medical costs.”
How Medical Debt Leads to Bankruptcy
Dr. David Himmelstein, the lead author of the study, explained that most Americans are “just one serious illness away from bankruptcy,” and that only the wealthiest Americans actually can afford life-saving medical treatment. For most people who are firmly within the middle class, health insurance policies simply are insufficient to prevent substantial medical debt in the event of a medical emergency or long-term illness. Indeed, most health insurance policies require copays, deductibles, and other costs. As such any kind of “prolonged illness” leads individuals and families to owe significant amounts of money to hospitals and other healthcare providers, not to mention the cost of lost wages associated with a long-term illness.
While the ACA did result in many more Americans have health insurance coverage, consumer advocates suggest that more needs to be done to ensure that healthcare costs never lead to bankruptcy.
Contact an Oak Park Bankruptcy Lawyer
Do you have questions about filing for bankruptcy in Oak Park? An experienced Oak Park bankruptcy attorney at our firm can discuss your case with you. We have years of experience advocating for consumers and can help you to understand options that may be available to you. Contact the Emerson Law Firm to learn more.
See Related Blog Posts:
U.S. Supreme Court Will Consider Collection Actions Against a Bankruptcy Debtor
New Illinois Legislation Addresses Debt Collection Lawsuits
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