Posts Tagged ‘Medical bankruptcy’

Medical Bills Major Cause of Bankruptcies

Wednesday, February 29th, 2012

Most Americans are just one illness away from bankruptcy – even those with healthcare insurance.  Unfortunately, there are millions of other Americans who don’t have the cash to cover their medical bills.  Hospitals expect quick payment and offer insured patients little flexibility if they have difficulty paying bills.  Those unpaid bills are sent to collection agencies, and damage the individual’s credit history for years.  The crisis in American healthcare is not restricted to emergency rooms where uninsured people wait – often for long periods of time — for care.

In fact, a study has estimated that as many as 62.1 percent of all bankruptcies are due – at least in part – to medical expenses that the person simply cannot afford to pay.  And, according to the study’s authors, that might well be a conservative estimate.

“Unless you’re a Warren Buffett or Bill Gates, you’re one illness away from financial ruin in this country,” said Steffie Woolhandler, M.D., of the Harvard Medical School.  “If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that’s the major finding in our study.”

Yet, 75 percent of the people with a medically-related bankruptcy had health insurance.  “That was actually the predominant problem in patients in our study — 78 percent of them had health insurance, but many of them were bankrupted anyway because there were gaps in their coverage like co-payments and deductibles and uncovered services,” Woolhandler said.  “Other people had private insurance but got so sick that they lost their job and lost their insurance.”

Even patients who have coverage “may not be protected from high out-of-pocket costs when they are diagnosed with cancer,” according to a report by the Kaiser Family Foundation and the American Cancer Society.  In addition to high insurance premiums, those costs may force patients to amass debt as they attempt to pay for the care they need — or postpone or skip lifesaving treatment.  “Having insurance increases people’s ability to access care,” said Mark Rukavina, an expert on medical debt and the executive director of The Access Project, a Boston-based healthcare advocacy group.  “The good news is that they get the care, but the bad news is it’s unaffordable.”

The days of Cadillac health plans are pretty much over,” said Peter Cunningham of the Center for Studying Health System Change in Washington, which found that 20 percent of American families have problems paying medical bills.  More than 44 million Americans currently are paying off medical debt, the Commonwealth Fund said, an increase over the 37 million in 2005.  Two years ago, Congress reported that 30 million Americans of working age had been contacted by a collection agency for unpaid medical bills.  One survey asks how people have been affected by their unpaid medical bills.  “Two-thirds of people say … they’ve had problems paying for some of the basic necessities — food, rent, mortgage, clothes, basic stuff,” Cunningham said. “They’ve put off major purchases.  They’ve taken money out of savings or borrowed money.  An increasing number consider filing for bankruptcy.”

Although it’s not yet known how the Patient Protection and Affordable Care Act (ACA) will impact medical bankruptcies, a study from Massachusetts since its healthcare reform became effective in 2006 offers scant good news. The study, which was published in the American Journal of Medicine, determined that between early 2007 and mid-2009, the share of all Massachusetts bankruptcies with medical grounds fell from 59.3 percent to 52.9 percent, a 6.4 percent decrease.  Because there was a sudden rise in total bankruptcies during that period, medical bankruptcy filings in the state rose from 7,504 in 2007 to 10,093 in 2009.

According to the study’s authors, “Even before the changes in healthcare laws, most medical bankruptcies in Massachusetts – as in other states – afflicted middle-class families with health insurance.  High premium costs and gaps in coverage – co-payments, deductibles and uncovered services – often left insured families liable for substantial out-of-pocket costs.”

“Despite a marked decline in the un-insurance rate in Massachusetts since the implementation of health reform, the proportion of bankruptcies that occurred in the wake of medical problems has not decreased significantly, and the absolute number of medical bankruptcies has actually increased by one third,” said David U. Himmelstein, M.D., from City University of New York School of Public Health, and the study’s lead author.

MLK & Healthcare Reform

Monday, January 30th, 2012

A recent byline article in Forbes magazine by Carolyn McClanahan, M.D., CFP, raises many issues about healthcare in the year 2012.  According to McClanahan “The New England Journal of Medicine’s (NEJM) article on the fate of healthcare reform in 2012 greatly saddens the optimist in me. It discusses four important events, and I’ll share my “simplistic view” of these events:

“State legislatures getting in gear to fill their role assigned by the ACA.  As I’ve discussed previously, we have a complicated healthcare system which is expensive and inefficient.  Instead of simplifying, each state will implement or delay implementing the law based solely on their political interest.  This is not productive.”

“The second event is the Supreme Court’s ruling on the legality of the ACA in May. It is possible that the entire law could be struck down, (albeit unlikely).  If this scenario plays out, we will have wasted billions implementing parts of the law to date.  Another more likely scenario is the law will be upheld but the mandate that everyone purchase health insurance be thrown out.  This would severely weaken the law because people will only buy insurance when they are sick.  There will still be a requirement that insurance companies have to sell insurance to everyone regardless of health status.  This is not financially feasible.  Most likely, the law will stand, but who really knows?”

“The third key event is the deadline for states to apply for federal grants to operate their health insurance exchange.  State who don’t apply will either have to cede control of the exchanges to the federal government or pay for the cost of implementation themselves.  State governors and legislatures against the ACA, like my home state of Florida, risk turning away resources and having more of the federal government running the show.  Talk about the law of unintended consequences.”

“The fourth key date is the election in November.  If President Obama wins re-election, implementation will continue.  If he loses, the winner will have a difficult time repealing the law unless the Republicans can win 60 seats in the Senate.  So what is their plan?  Have everyone drag their feet on implementation or do a half-baked job.  Wouldn’t it be nice if instead they came up with a good plan to fix the parts that are not working?  Simplify and clean up the mess of the insurance part of the law and implement with speed and clarity the good parts like preventive care initiatives, rebuilding our primary care workforce, and improving our ability to handle large disasters.”

A similar viewpoint was expressed by Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, who said that access to healthcare is the next civil rights frontier.  According to Sebelius, “On Martin Luther King Day, it is easy to congratulate ourselves on our progress in moving beyond segregated schools, lunch counters and drinking fountains. The hard question is this: what injustices do we still accept that should, in fact, be intolerable?  Surely Dr. King would find the next civil rights frontier in healthcare, with nearly 50 million uninsured, almost 45,000 deaths annually due to lack of insurance, and more than half of all personal bankruptcies linked to illness and medical bills.”

“While the Affordable Care Act will bring improvements, such as decreasing the ranks of the uninsured, supporting community health centers, and investing in prevention, it leaves many gaps. At least 23 million people will still be uninsured in 2019. Tens of millions will be underinsured, one serious illness away from financial ruin. Most people who suffer medical bankruptcy had private insurance before getting sick. And medical bankruptcy is a cruel double whammy. Already beset with pain, anxiety and fear – due to serious illness – families find themselves financially devastated.  This doesn’t happen in other industrialized countries, which have high-quality health systems that cover everyone.”

As a department, we are committed to ensuring that all Americans achieve health equity by eliminating disparities and doing what we can to improve the health of all groups, including the poor and underserved,” Sebelius said. “One of the most important ways we are doing this is through our new health care law, the Affordable Care Act.”