Something we've all experienced - financial disaster due to illness

[Guest guest]

This was the focus of PBS Friday night Now that medical industry is

breaking the backs of middle America financially, that Americans who

are fully insured end up in bankruptsy when they most need their

money, homes and other assets. Also that new policies passed by

congress last year makes it harder for Americans to get out from

underneath debt and gives more control to banks. Chase bank's

profit was up by 125% last year on account of new bankruptsy laws

alone favoring banks, show further revealed. One of articles cited:

http://content.healthaffairs.org/cgi/content/full/hlthaff.w5.63/DC1

2 February 2005

MarketWatch:Illness And Injury As Contributors To Bankruptcy

Even universal coverage could leave many Americans

vulnerable to bankruptcy unless such coverage was

more comprehensive than many current policies.

By U. Himmelstein, Warren, Deborah Thorne, and

Steffie Woolhandler

ABSTRACT:

In 2001, 1.458 million American families filed for bankruptcy. To

investigate medical contributors to bankruptcy, we surveyed 1,771

personal bankruptcy filers in five federal courts and subsequently

completed in-depth interviews with 931 of them. About half cited

medical causes, which indicates that 1.9–2.2 million Americans

(filers plus dependents) experienced medical bankruptcy. Among those

whose illnesses led to bankruptcy, out-of-pocket costs averaged

$11,854 since the start of illness; 75.7 percent had insurance at

the onset of illness. Medical debtors were 42 percent more likely

than other debtors to experience lapses in coverage. Even middle-

class insured families often fall prey to financial catastrophe when

sick.

If the debtor be insolvent to serve creditors, let his body be cut

in pieces on the third market day. It may be cut into more or fewer

pieces with impunity. Or, if his creditors consent to it, let him be

sold to foreigners beyond the Tiber.

—Twelve Tables, Table III, 6 (ca. 450 B.C.)

Our bankruptcy system works differently from that of ancient Rome;

creditors carve up the debtor's assets, not the debtor. Even so,

bankruptcy leaves painful problems in its wake. It remains on credit

reports for a decade, making everything from car insurance to house

payments more expensive.1 Debtors' names are often published in the

newspaper, and the fact of their bankruptcy may show up whenever

someone tries to find them via the Internet. Potential employers who

run routine credit checks (a common screening practice) will

discover the bankruptcy, which can lead to embarrassment or, worse,

the lost chance for a much-needed job.2

Personal bankruptcy is common. Nearly 1.5 million couples or

individuals filed bankruptcy petitions in 2001, a 360 percent

increase since 1980.3 Fragmentary data from the legal literature

suggest that illness and medical bills contribute to bankruptcy.

Most previous studies of medical bankruptcy, however, have relied on

court records—where medical debts may be subsumed under credit card

or mortgage debt—or on responses to a single survey question.4 None

has collected detailed information on medical expenses, diagnoses,

access to care, work loss, or insurance coverage. Research has been

impeded both by the absence of a national repository for bankruptcy

filings and by debtors' reticence to discuss their bankruptcy; in

population-based surveys, only half of those who have undergone

bankruptcy admit to it.5

The health policy literature is virtually silent on bankruptcy,

although a few studies have looked at impoverishment attributable to

illness. In his 1972 book, Sen. Kennedy (D-MA) gave an

impressionistic account of " sickness and bankruptcy. " 6 The

likelihood of incurring high out-of-pocket costs was incorporated

into older estimates of the number of underinsured Americans: twenty-

nine million in 1987.7 About 16 percent of families now spend more

than one-twentieth of their income on health care.8 Among terminally

ill patients (most of them insured), 39 percent reported that health

care costs caused moderate or severe financial problems.9 Medical

debt is common among the poor, even those with insurance, and

interferes with access to care.10 At least 8 percent, and perhaps as

many as 21 percent, of American families are contacted by collection

agencies about medical bills annually.11

Our study provides the first extensive data on the medical

concomitants of bankruptcy, based on a survey of debtors in

bankruptcy courts. We address the following questions: (1) Who files

for bankruptcy? (2) How frequently do illness and medical bills

contribute to bankruptcy? (3) When medical bills contribute, how

large are they and for what services? (4) Does inadequate health

insurance play a role in bankruptcy? (5) Does bankruptcy compromise

access to care?

A Brief Primer On Bankruptcy

" Bankrupt " is not synonymous with " broke. " " Bankrupt " means filing a

petition in a federal court asking for protection from creditors via

the bankruptcy laws. A single petition may cover an individual or

married couple. The instant a debtor files for bankruptcy, the court

assumes legal control of the debtor's assets and halts all

collection efforts.

Shortly after the filing, a court-appointed trustee convenes a

meeting to inventory the debtor's assets and debts and to determine

which assets are exempt from seizure. States may regulate these

exemptions, which often include work tools, clothes, Bibles, and

some equity in a home.

About 70 percent of all consumer debtors file under Chapter 7 of the

Bankruptcy Code; most others file under Chapter 13. In Chapter 7 the

trustee liquidates all nonexempt assets—although 96 percent of

debtors have so little unencumbered property that there is nothing

left to liquidate. At the conclusion of the bankruptcy, the debtor

is freed from many debts. In Chapter 13 the debtor proposes a

repayment plan, which extends for up to five years. Chapter 13

debtors may retain their property so long as they stay current with

their repayments.

Under both chapters, taxes, student loans, alimony, and child

support remain payable in full, and debtors must make payments on

all secured loans (such as home mortgages and car loans) or forfeit

the collateral.

Rest of long article at link above....

[Guest guest]

Yes, about two years ago the number of people filing bankruptcy for medical

reasons went over 50% and its now significantly higher than that. Most of

those peple had 'insurance' when they got sick, but then they lost their

jobs or the expenses that were not paid for by insurance were too high, etc.

so they lose their homes.. futures, etc. I've heard it described as the

largest equity transfer (from the formerly middle class to banks) in US

history.

Its important that people realize this.. the amount of money being shifted

away from families and working people is astonomical..

A Harvard professor - the world expert on bankruptcy - told me this..

[Guest guest]

The most interesting thing to me was that one of the things sick

people are most likely to loose first is their HEALTH INSURANCE!!!

Premiums are so high. How convenient for health insurance companies.

Generally they are only covering people who are working fulltime now

anyway because group rates are the only rates people can afford. So

if person becomes too sick to work fulltime, they don't have to worry

about paying for their care, since sick person cannot pay their health

insurance premium. I know my parent's premiums were very low so they

could make that a priority but now premiums are so high.

Person they had featured on PBS show had his own store/business which

made machine tools I believe. He and his wife were middle aged and

had paid off their home, very nice home, in full. Had children who

were in college. He had an anurism (sp?)and stroke. Had to have

physical therapy to walk again but now walking, lost some short term

memory so coming along, but now the bank owns his home

again...!!!..and they are back to making mortgage payments, business

is closed. Wife is working now to support and starting from the

beginning with house payments!

--- In , LiveSimply <quackadillian@...>

wrote:

>

> Yes, about two years ago the number of people filing bankruptcy for

medical

> reasons went over 50% and its now significantly higher than that.

[Guest guest]

Barb,

Here is that really good study that I was trying to come up with the source

of, on these financial disasters

caused by our health care policy (or lack of it) and sudden illness.

http://content.healthaffairs.org/cgi/content/full/hlthaff.w5.63/DC1

also see this fairly recent article about it in the Washington Post..

http://www.washingtonpost.com/wp-dyn/articles/A9447-2005Feb8.html

Warren is the person I was talking about in my response to your

post.

On 2/10/07, barb1283 <barb1283@...> wrote:

>

> The most interesting thing to me was that one of the things sick

> people are most likely to loose first is their HEALTH INSURANCE!!!

> Premiums are so high. How convenient for health insurance companies.

> Generally they are only covering people who are working fulltime now

> anyway because group rates are the only rates people can afford. So

> if person becomes too sick to work fulltime, they don't have to worry

> about paying for their care, since sick person cannot pay their health

> insurance premium. I know my parent's premiums were very low so they

> could make that a priority but now premiums are so high.

> Person they had featured on PBS show had his own store/business which

> made machine tools I believe. He and his wife were middle aged and

> had paid off their home, very nice home, in full. Had children who

> were in college. He had an anurism (sp?)and stroke. Had to have

> physical therapy to walk again but now walking, lost some short term

> memory so coming along, but now the bank owns his home

> again...!!!..and they are back to making mortgage payments, business

> is closed. Wife is working now to support and starting from the

> beginning with house payments!

>

>

> >

> > Yes, about two years ago the number of people filing bankruptcy for

> medical

> > reasons went over 50% and its now significantly higher than that.

>

>

>