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Medical bankruptcies must factor into debate

By Jeffrey Freedman
The Buffalo News

No conversation about reform of our health care system is complete unless it includes a discussion of how medical costs are driving Americans to bankruptcy court.

The first nationwide study on medical causes of bankruptcy (released June 4 by Harvard Law School, Harvard Medical School and Ohio University) found that 62.1 percent of all bankruptcies filed in 2007 were related to medical problems. This represents a 50 percent increase since 2001.

Those seeking the protection of bankruptcy due to uncovered medical expenses are typically middle class. Two-thirds of them own their homes. Three-fifths have college degrees. They are employed and have medical coverage from private insurers when the crisis hits, but by the time they are considering bankruptcy most have lost their jobs due to their illness, and have lost their medical coverage and are unable to get new private coverage.

Today, too many Americans are just one serious illness away from bankruptcy. Most health insurance policies have loopholes, copayments and deductibles that can bankrupt a family in a short time.

The study found that patients with diabetes typically pay an average of $26,971 in out-of-pocket expenses each year. The largest single expense for medically bankrupt families is a hospital stay, and prescription drugs make up the largest recurring expense at 18.6 percent of total debt. Patients often put part of these debts on their credit cards, thus accumulating large amounts of credit card debt added to the bills they owe to medical facilities.

The number of patients who don’t take all of their prescribed medications because they cannot afford the drugs is also growing. In the long run, this noncompliance costs all of us more.

As the saying goes, “ignore your health and it will go away.” Untreated medical conditions don’t get better, they get worse and more expensive to treat.

Bankruptcies are on the rise. Nationwide, bankruptcies for the first quarter of 2009 were up 35 percent over the same period last year.

The executive director of the American Bankruptcy Institute, Samuel J. Gerdano, predicts this year more than 1 million bankruptcies will be filed.

For most families the decision to file bankruptcy is a difficult choice, but it offers a fresh start — a ray of hope — when medical debts become overwhelming. Health care costs should be the last thing that drives people to our bankruptcy courts, not one of the first.

When it comes to reform of our health care system there’s a lot to talk about. As we continue the debate let’s not forget the hundreds of thousands of people who have been forced into bankruptcy due to the inefficiencies of our health system and the exorbitant costs of uncovered medical expenses.