Wasted Away in Medical Bankruptcyville: Jimmy Buffet meets Warren Buffet

by Clive Riddle, June 5, 2009

Just published this issue in the American Journal of Medicine, by David U. Himmelstein, MD et al, is: Medical Bankruptcy in the United States, 2007: Results of a National Study. Here’s what Harvard’s Doctor Himmelstein has to say about what this study means to you: “unless you're Warren Buffett, your family is just one serious illness away from bankruptcy.”

Now before you go file a legal change of name to Warren Buffet, you should know the paper’s authors are strong advocates of a particular position: a single payer health plan, and their conclusion is that health insurance in its present form will not protect you from medical bankruptcy, only Warren Buffet or a single payer plan will.

The headlines from the press releases regarding the study indicate medical bills cause 62.1% of all bankruptcies. That claim might be open to some interpretation, given 29% of debtors attributed medical bills as the reason for their bankruptcy. Here’s the table from the study that arrives at that figure:

• 29%: Debtor said medical bills were reason for bankruptcy: 29%

• Medical bills >$5000 or >10% of annual family income: 34.7%

• Mortgaged home to pay medical bills 5.7%

• Medical bill problems (any of above 3) 57.1%

• Debtor or spouse lost >2 weeks of income due to illness or became completely disabled 38.2%

• Debtor or spouse lost >2 weeks of income to care for ill family member: 6.8%

•  Income loss due to illness (either of above 2): 40.3%

• Debtor said medical problem of self or spouse was reason for bankruptcy: 32.1%

• Debtor said medical problem of other family member was reason for bankruptcy: 10.8%

• Respondents listing any of above 62.1%

But quibbling over the above that is not to take away from the seriousness of the findings they present, only to provide some disclosure to those unaware. So without digressing into an argument for or against a single payer health plan, certainly it hard to argue that various health insurance policies exist in the marketplace which leave patients seriously underinsured, and a number of these underinsured patients, in addition to the uninsured, found themselves in bankruptcy.

Thus the threat of medical bankruptcy does indeed loom over more than the uninsured population. In this recession and season of health reform, it is a very key issue. So here’s some of the other highlights from the study conducted by Doctor Himmelstein and friends from Harvard Medical School, Harvard Law School, and Ohio University and funded by the Robert Wood Johnson Foundation:

•  Demographically: 60.3% of medical bankruptcies had attended college, 66.4% had owned a home and 20% included a military veteran or active duty soldier.

• While many of the demographics are very similar, there are a few notable differences in the demographics of those experiencing medical bankruptcies vs. non-medical bankruptcies: Employment (75.5% medical vs. 85.0% non medical); market value of home ($141k vs. $159k); and a lpase in health coverage occuring sometime in the two years before bankruptcy (40% medical vs. 34% non medical)

• Primary causes of medical bankruptcies: Hospital bills 48%; drug costs (19%); doctors' bills (15%) and insurance premiums (4%). Also, for 38% of cases, lost income due to illness was a factor.

•  Out-of-pocket medical costs for the bankrupting illness averaged $17,943.

• In 1981, using the same methodologies, medically-caused bankruptcies were 8% of total bankruptcies. In 2001, the figure was 46.2%

• 92% of these medical debtors had medical debts over $5,000 or 10% of pretax family income

• More than 75% of bankrupt families had some form of health insurance