June 5, 2009

Medical Costs Cause Most Bankruptcies

In 2001, researchers found that about 46% of bankruptcies were for medical reasons.

By 2007, that percentage had increased to 62% (!) -- usually from medical debts (more than 90% of cases), and the small remainder from loss of income.

Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001. --The American Journal of Medicine.

The problems of health care in America are actually quite, quite simple, and well understood.

Private insurers spend significant money, time and effort screening out and denying insurance to people likely to need more than occasional health care.

They try to insure only those who are healthy.

They also spend a lot of money for staff to work hard to deny insurance claims on any possible technical reason, and carefully write policies to shift more and more of the normal costs of care off their list of insured benefits and onto individuals and families. Many of these technical exceptions are hard for customers to understand when reading the policies.

The other major health care cost problem is doctors and care facilities ordering more tests and procedures only in order to increase profits.

This is done under cover of the initial rationale that doctors are trying to be careful in order to avoid being sued. This nice On-Point program has a knowledgeable doctor (Dr. Atul Gawande) travel to similar West Texas cities to discover why health care in one costs twice what it does in the other very similar city. It's strictly about increasing profits.

(One of many shocking parts begins at 10 and 1/2 minutes into the program -- and that's only a tip of the iceberg part. Also, here is a written article on this in the The New Yorker.)

Increasing profits even while bankrupting previously financially sound families.

These two major problems are clear and well-understood.

As clear as day.

Smaller problems are used to obscure and distract attention away from these primary problems.

Like the transfer of taxpayer wealth to bank investors, we have a situation where true but misleading reasons are presented in order to hide the reality of what is happening.

Health insurers don't want public competition. And a certain number of doctors do not want competition.

They make big campaign contributions to buy influence and votes.

Our Congress is compromised.

And it's been this way so long it seems normal.


  1. There is no evidence in the world to show that the private insurance model for basic healthcare is economically efficient or provides any significant quality healthcare. The U.S. is the one case in point. It has the worst healthcare in the developed world. It is rationed, choices are limited and insurance scams keep many people poor. It DOES NOT WORK. That is why all other developed countries and many developing countries went to a national healthcare program.

    Trying to patch what we have now is just delaying the future economic implosion. The American people have been hit over the head 3 times now with this "We need Private Insurers" argument sponsored by the insurance companies. With a national healthcare program we will avoid economic implosion, improve quality and provide new markets for private insurance companies. They do not belong in basic healthcare. All the experience from 37 countries has shown that insurance companies are best suited for supplemental and optional programs.

    We the people need to control our healthcare. There is no reason why we have to preserve the business of a few companies. It is not in our interest. So...they lose a few thousand jobs? Compare that to saving 10s of thousands of people from premature death and saving 980,000 people from healthcare related bankruptcy. THERE IS NO COMPARISON.

    Do people need to be hit over the head 4 and 5 times to get the point? We are the only developed country in the world that insists on destroying our whole economy and health just to preserve a few companies profits. Let US take care of US though a Single Payer system and let the insurance companies move into other areas of health insurance. We will all WIN!

  2. "You", reading through what you say, I think you'll like my proposal of what to do. Please read through the entire post (link below) -- I think you'll find it a very interesting proposal. I'd be glad to hear your thoughts on this: