A report by Harvard University revealed that medical bills and healthcare costs were either fully or partially accountable for up to 62% of those filing for bankruptcy in 2007. This latest set of data provides further momentum behind President Obama's healthcare reform plans.
Private Medical Insurance Not Working
As many as 78% of those filing for bankruptcy due to healthcare costs had medical insurance when their illness began. Steffie Woolhandler, an associate medical professor at Harvard, stated that: "Health insurance is not a guarantee that illness won't bankrupt you." There are many healthcare costs that aren't covered, such as deductibles and uncovered services.
Filing for Bankruptcy because of Medical Bills
- US citizens filing for bankruptcy with private medical insurance in-place had unpaid healthcare costs amounting to an average of $17,749.
- Those who filed without coverage reported average unpaid medical bills of $26,971.
*Whilst the bankruptcy amount is $9,222 lower for this with coverage, the effect is the same. Private medical insurance is continuing to fail American citizens.
Recent Healthcare Reforms
The American Recovery and Reinvestment Act came into law on February 17 2009. It provided $87 billion to help with Medicaid, offering a 65% subsidy for nine months to help unemployed people with COBRA coverage. COBRA allows the unemployed to continue healthcare insurance with their previous employer. Congress estimates that this new measure will help up to 7 million Americans.
Obama Calls for Further Healthcare Reforms
- Cut the cost of long-term healthcare costs for both business and government.
- Protect and reduce the number of people filing for bankruptcy due to unaffordable medical bills.
- Guarantee a choice of doctors and healthcare plans.
- Provide investment in prevention and wellness.
- Make improvements in patient safety and overall quality of care.
- Help U.S. citizens to maintain their coverage when they change or lose their job.
- Remove any barriers to obtaining medical insurance due to pre-existing medical conditions.
In a letter to Senators Edward M. Kennedy (D-Mass.) and Max Baucus (D-Mont.), President Obama stated: "It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need."
If passed into law, Obama's healthcare reforms are likely to mean that the number of U.S. citizens filing for bankruptcy is substantially reduced. Although healthcare costs will be steep, access to comprehensive medical coverage for all could well become a reality within the next few years.
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Sources
Girion, Lisa. (4 June, 2009). "Medical bills pay a role in 62% of bankruptcies, study says." Los Angeles Times.
Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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