We are All Just one Serious Illness Away From Bankruptcy, Even the Insured, Says Harvard Study

June 4, 2009

(ChattahBox)-If you think your employer based health insurance plan would protect you from the catastrophic medical bills associated with a serious illness, think again. A new Harvard study reveals the alarming rise in middle class families with health insurance, forced to declare bankruptcy after suffering from a serious medical illness and it could happen to you next. Is it time for national health insurance yet?

The Harvard researchers began their study by surveying random debtors of 2,314 bankruptcy filings during early 2007 and examined their bankruptcy court records. The study was conducted before the recession hit, so actual figures may now be worse.

The researchers also conducted telephone interviews with 1,032 of the debtors and the researchers began to hear the same stories repeatedly, of families financially devastated by high medical bills from a serious illness.

The researchers reported that a quarter of insurance firms cancel coverage immediately when an employee suffers a serious, disabling illness and another another quarter cancel coverage within a year.

The Harvard study found that nearly two-thirds of all bankruptcies in 2007 were caused by medical problems, and the resulting financial albatross of uninsured medical costs. This rise in medical bankruptcies accounts for a nearly 50 percent increase in bankruptcies attributable to medical problems, since 2001.

Shockingly, more than three-quarters of the debtors were insured at the start of the bankrupting illness, including 60.3 percent who held private coverage. The bankrupted families were mostly middles class people who were living the American dream, before a serious illness drove them to financial ruin.

Two-thirds of the debtors were homeowners and three-fifths had college educations. The Harvard researchers uncovered an all too typical path to bankruptcy, which begins with a serious illness that leads to job loss and canceled insurance.

The loss of income from the breadwinner in the family, combined with high medical bills leaves families with precious few options and they find themselves in the humiliating position of having to declare bankruptcy.

Even with their health insurance intact, the often high out-of-pocket medical costs, including co-payments, deductibles and uncovered services, still medically bankrupt families with private insurance. The study showed that debtors with private insurance reported medical bills that averaged $17,749 compared to $26,971 for uninsured debtors.

The researchers have concluded from their study, that the current employer based system of private health insurance in our country is seriously flawed and needs to be scrapped and replaced with a national single payer system.

“…For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments and deductibles that illness can put you in the poorhouse,” said Dr. David Himmelstein, Professor of Medicine at Harvard and the lead author of the study. He describes private health insurance as “…a defective product, akin to an umbrella that melts in the rain.”

Co-author of the study, Dr. Steffie Woolhandler, Professor of Medicine at Harvard and primary care physician in Cambridge, Mass., says: “We need to rethink health reform. Covering the uninsured isn’t enough.” Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it. Only single-payer national health insurance can make universal, comprehensive coverage affordable…”

Dr. Deborah Thorne, Professor of Sociology at Ohio University and study co-author, believes that our health system “…is so dysfunctional that even the most mundane illness or injury can result in bankruptcy.”

Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard, study co-author and head of the Congressional Oversight Panel for the Federal TARP program, notes that bankruptcy is considered shameful by these beleaguered middle class families and …” is a last choice to deal with unmanageable circumstances.”

This study paints a stark portrait of the flaws in our current health care system based on private insurance and the burdens it places on families, both financial and emotional. Are you listening Congress?

Current national health insurance discussions by President Obama and government leaders are focused on maintaining some semblance of the same broken system.

Dr. Woolhandler summed it up best: …”Unfortunately, Washington politicians seem ready to cave in to insurance firms and keep them and their counterfeit coverage at the core of our system. Reforms that expand phony insurance – stripped-down plans riddled with co-payments, deductibles and exclusions – won’t stem the rising tide of medical bankruptcy.”

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3 Responses to “We are All Just one Serious Illness Away From Bankruptcy, Even the Insured, Says Harvard Study”

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    […] We are All Just one Serious Illness Away From Bankruptcy, Even the – Chattahbox.com(ChattahBox)-If you think your employer based health insurance plan would protect you from the catastrophic medical bills associated with a serious illness, think again. A new Harvard study reveals the alarming rise in middle class families with […]

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    […] for a National Health Program, supports a single payer option. A recent letter issued by a group of Harvard doctors supports a single payer option, noting that nearly two-thirds of all bankruptcies in 2007 […]

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