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Monday, March 3, 2014

Medical bills are the leading cause for American bankruptcy

Medical costs and bankruptcy are a problem for millions
Many medical related bankruptcies effect insured Americans
By Kenneth Gray

As many individuals as well as government officials are attempting to analyze and curb instances of bankruptcies and severe financial problems, many economists and government officials are taking a look at what is causing major financial issues such as bankruptcies and discovering that the leading cause of bankruptcies is not credit card bills or unpaid mortgages, but rather unpaid medical bills.

The issue of unpaid medical bills is so serious and far reaching that 2 million people file bankruptcy because of them on a yearly basis, and countless others may teeter dangerously close to the same predicament. As many as twenty percent of Americans between the ages of 19 and 64 are reportedly facing major financial problems related to medical bills.

Health insurance is not full protection against bankruptcy

While lack of insurance may surely be a major factor for many people whose bills have spiraled to the point of bankruptcy, the unfortunate reality is that even people who are insured are among the individuals facing financial catastrophe because of their doctor and hospital bills.

Many policies that come at lower price points or that may be available to individuals who are purchasing their own plans may come with higher deductibles that mean even an insured person may face extremely high costs out of pocket. Some policies, for example, may come with deductibles as high as five or ten thousand dollars, which can present a high financial burden for the average household.

When these out of pocket expenses are not paid, they may balloon to even greater amounts, placing many patients at great risk for forcing their bills to go unpaid, which may then lead to bankruptcy.

Affordable Care Act not a cure all

The issue of medical bills and major financial hardship is not a new one, and legislation like the Affordable Care Act has sought to minimize instances of bankruptcy and  other major problems related to medical debt.

The Affordable Care Act expands coverage to millions of Americans in a number of ways, by eliminating many of the reasons that coverage could previously have been denied and by offering policies to individuals at lower price points, as they are subsidized by the government.

The Affordable Care Act has already greatly reduced the number of uninsured Americans, but many economists argue that this is not necessarily a total fix for the problem of medical billing related debt. As it is, many of the people filing bankruptcy are already covered by a policy of some kind.

Some hope for change

Although medical debt remains a serious problem for many, there is some positive information that the steps being taken to reduce instances of major financial problems related to medical debt are having some impact on the number of individuals facing bankruptcy.

The numbers of medical debt related bankruptcies have gone down in the last year, and it does seem that more accessible health care, along with requirements to make bills more manageable may be helping more people keep their financial and physical health in tact. 

About the author: Kenneth Gray has spent years helping people resolve outstanding medical bills for individuals and providers and is always happy to answer medical billing questions at A-Fordable Billing Solution.