Effects of Medicaid on Consumer Bankruptcy

Most of us know that Medicaid can help to ensure that low-income and older adults receive the medical care they need. But can Medicaid also help when it comes to consumer bankruptcy? A recent post on The Hill suggests that “Medicaid coverage might allow some families to avoid bankruptcy.” But in order for this to happen, states must agree to implement the Medicaid expansion in the Affordable Care Act.
Illinois has implemented the Medicaid expansion. However, an article in the Huffington Post suggests that recent election results could end up undercutting Medicaid expansion in certain states, thereby threatening the financial stability of Illinois consumers. Specifically, the election of Republican governors in Illinois, Arizona, Arkansas, Maryland, and Massachusetts—states that had implemented the Medicaid expansion—has left some commentators wondering whether “hundreds of thousands who enrolled in expanded Medicaid” may find themselves with benefits from a vulnerable program.
Bankruptcy and Medicaid: What’s the Connection?
The connection between Medicaid and consumer bankruptcy actually makes a lot of sense. If you think about it, when you’re overwhelmed with medical bills, you’re more likely to consider filing for personal bankruptcy. Indeed, as the recent post notes, “families declare bankruptcy when they are overwhelmed with debt.” As such, Medicaid coverage—which can provide health care without the expensive price tag—might be able to help some Illinois residents to avoid filing for consumer bankruptcy. In other words, if you have Medicaid coverage, you won’t end up with insurmountable medical bills when you require significant treatment. And then, if you don’t have a whopping medical bill, you may not need to file for bankruptcy.
Is there any proof to support this idea? According to the post, in the years immediately following Medicaid expansions in both the 1990s and 2000s, fewer consumer bankruptcies took place. Indeed, “every ten-percentage-point increase in Medicaid eligibility . . . led to an eight-percent reduction in bankruptcy rates.” Health reform measures in other states also resulted in an overall decrease in personal bankruptcy rates.
This data comes from bankruptcy records themselves, and doesn’t necessarily take into account consumers’ reasons for filing (or not filing, as the case may be) for bankruptcy. Although, as the article emphasizes, anecdotal evidence from bankruptcy filers over the last decade indicates that medical bills often lead to consumer bankruptcy.
Right now, 23 states haven’t implemented the Affordable Care Act’s Medicaid expansion. Will the benefits from the expansion stand in Illinois?
Medicaid Expansion in Illinois
According to an article in the Chicago Tribune, nearly 470,000 Illinois residents “have enrolled in the state’s expanded Medicaid program under the health reform law.” However, Bruce Rauner, who recently won the gubernatorial election in Illinois, emphasized that he wouldn’t have accepted the Medicaid expansion if he had been governor at the time. While Rauner indicated that he’s “not advocating a rollback,” he does support restructuring Medicaid in our state. “It is filled with waste and fraud,” he said.
Healthcare advocates worry that Illinois residents who currently rely on Medicaid might encounter difficulties in the future. Do you have questions about consumer bankruptcy and your rights as a consumer in Illinois? Contact an experienced Oak Park bankruptcy lawyer at the Emerson Law Firm. We can answer your questions today.
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