Doctor: Most Americans “just one serious illness away from bankruptcy.”

CHICAGO — For many Americans, putting one’s health first can mean putting one’s financial status at risk. A study of bankruptcy filings in the United States showed that 66.5% were due, at least in part, to medical expenses.

The study, led by Dr. David Himmelstein, Distinguished Professor at the City University of New York’s (CUNY) Hunter College and Lecturer at Harvard Medical School, indicates that about 530,000 families each year are financially ruined by medical bills and sicknesses. It’s the first research of its kind to link medical expenses and bankruptcy since the passage of the Affordable Care Act (ACA) in 2010.

“Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy,” Himmelstein says in a release by the Physicians for a National Health Program. “For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, copayments and deductibles that illness can put you in the poorhouse.”

Himmelstein and his multidisciplinary research team — which included two doctors, two lawyers, and a sociologist from the Consumer Bankruptcy Project — surveyed a random sample of 910 Americans who filed for personal bankruptcy between 2013 and 2016. They found that medical bills made up 58.5% of bankruptcies, and illness-related income losses contributed to 44.3%, with many of the debtors citing both as causes of bankruptcy.

“Even the best job-based health insurance often vanishes when prolonged illness causes job loss – just when families need it most. Private health insurance is a defective product, akin to an umbrella that melts in the rain,” says Himmelstein.

The research showed little difference in the proportion of bankruptcy filings related to medical expenses since the ACA passed. In all, 67.5% of debtors said medical costs contributed to their bankruptcy in the first three years from the start of the law, compared to 65.5% prior to its passing.

The authors note, however, that bankruptcy filings are usually indicative of the financial suffering of the American middle class, who are more likely to go to bankruptcy court to protect assets such as property than low-income Americans, who were helped the most by the ACA.

“In the Supreme Court’s words, bankruptcy is a fresh start for the ‘honest but unfortunate debtor.’ Our study shows that for many bankruptcy debtors, the misfortune continues to come from the way we pay for health care,” says co-author Robert M. Lawless, the Max L. Rowe Professor of Law at the University of Illinois College of Law. “Bankruptcy may provide a fresh start, but it comes at a high financial and emotional cost for those who file. Filing for bankruptcy can stop the financial bleeding that the health care system imposes, but curing that system’s ills is the only lasting solution.”

The study was published in the American Journal of Public Health.

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