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Bankruptcy a Side Effect to Getting Sick: Report

Medical debt is getting the mainstream media spotlight today, largely due to a study that sought to determine if there is a correlation between individuals who incur a significant amount of medical debt and those individuals having to file for bankruptcy protection.

Nearly 60% of individuals who filed for bankruptcy protection either “very much agree” or “somewhat agree” with the statement that medical debt was a contributor to their decision to file for bankruptcy, according to a survey conducted by the American Journal of Public Health.

In comparison, 78% of those who completed the survey cited income or job loss, 45% cited unaffordable mortgages or foreclosure, 44% said they filed for bankruptcy because they were living beyond their means, and 25% said it was because of student loan debt.

Extrapolating the survey responses, researchers concluded that medical debt can be attributable to about 530,000 bankruptcy filings every year.

Even the creation of the Affordable Care Act has done little to curb the impact that medical debt can have on an individual’s finances, according to the study. Researchers looked at an earlier study from 2007, which concluded that 57% of individuals who filed for bankruptcy protection cited medical debt as a contributor.

“Although death is inevitable, good public policy can ensure that financial suffering from illness is not,” the researchers concluded.

Hospitals and the debt collectors that receive their placements are not doing enough to make individuals aware of charity care options, according to one consumer advocate.

“We were seeing hospitals sending debtors to debt collections without saying anything to the debt collectors” about charity care, says Emilia Morris, the legal director of Central California Legal Services. “The debt collectors are trying to collect these debts without making charity care available. The patient sometimes gets sued, gets a judgment entered against them, without ever having heard of charity care.”

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