Sick and Broke

[Guest guest]

This editorial in today's WP discusses the financial reasons for staying

healthy...............

By Warren

Nobody's safe. That's the warning from the first large-scale study of

medical bankruptcy.

Health insurance? That didn't protect 1 million Americans who were

financially ruined by illness or medical bills last year.

A comfortable middle-class lifestyle? Good education? Decent job? No

safeguards there. Most of the medically bankrupt were middle-class

homeowners who had been to college and had responsible jobs -- until illness

struck.

As part of a research study at Harvard University, our researchers

interviewed 1,771 Americans in bankruptcy courts across the country. To our

surprise, half said that illness or medical bills drove them to bankruptcy.

So each year, 2 million Americans -- those who file and their dependents --

face the double disaster of illness and bankruptcy.

But the bigger surprise was that three-quarters of the medically bankrupt

had health insurance.

How did illness bankrupt middle-class Americans with health insurance? For

some, high co-payments, deductibles, exclusions from coverage and other

loopholes left them holding the bag for thousands of dollars in

out-of-pocket costs when serious illness struck. But even families with

Cadillac coverage were often bankrupted by medical problems.

Too sick to work, they suddenly lost their jobs. With the jobs went most

of their income and their health insurance -- a quarter of all employers

cancel coverage the day you leave work because of a disabling illness;

another quarter do so in less than a year. Many of the medically bankrupt

qualified for some disability payments (eventually), and had the right under

the COBRA law to continue their health coverage -- if they paid for it

themselves. But how many families can afford a $1,000 monthly premium for

coverage under COBRA, especially after the breadwinner has lost his or her

job?

Often, the medical bills arrived just as the insurance and the paycheck

disappeared.

Bankrupt families lost more than just assets. One out of five went without

food. A third had their utilities shut off, and nearly two-thirds skipped

needed doctor or dentist visits. These families struggled to stay out of

bankruptcy. They arrived at the bankruptcy courthouse exhausted and

emotionally spent, brought low by a health care system that could offer

physical cures but that left them financially devastated.

Many in Congress have a response to the problem of the growing number of

medical bankruptcies: make it harder for families to file bankruptcy

regardless of the reason for their financial troubles. Bankruptcy

legislation -- widely known as the credit industry wish list -- has been

introduced yet again to increase costs and decrease protection for every

family that turns to the bankruptcy system for help. With the dramatic rise

in medical bankruptcies now documented, this tired approach would be no

different than a congressional demand to close hospitals in response to a

flu epidemic. Making bankruptcy harder puts the fallout from a broken health

care system back on families, leaving them with no escape.

The problem is not in the bankruptcy laws. The problem is in the health

care finance system and in chronic debates about reforming it. The Harvard

study shows:

• Health insurance isn't an on-off switch, giving full protection to

everyone who has it. There is real coverage and there is faux coverage.

Policies that can be canceled when you need them most are often useless. So

is bare-bones coverage like the Utah Medicaid program pioneered by new

Health and Human Services Secretary Mike Leavitt; it pays for primary care

visits but not specialists or hospital care. We need to talk about quality,

durable coverage, not just about how to get more names listed on

nearly-useless insurance policies.

• The link between jobs and health insurance is strained beyond the

breaking point. A harsh fact of life in America is that illness leads to job

loss, and that can mean a double kick when people lose their insurance.

Promising them high-priced coverage through COBRA is meaningless if they

can't afford to pay. Comprehensive health insurance is the only real

solution, not just for the poor but for middle-class Americans as well.

Without better coverage, millions more Americans will be hit by medical

bankruptcy over the next decade. It will not be limited to the poorly

educated, the barely employed or the uninsured. The people financially

devastated by a serious illness are at the heart of the middle class.

Every 30 seconds in the United States, someone files for bankruptcy in the

aftermath of a serious health problem. Time is running out. A broken health

care system is bankrupting families across this country.

The writer is a law professor at Harvard University.