Despite passage of the Affordable Care Act (ACA), medical bills continue to be a leading contributor to financial ruin for many Americans. Earlier this month, the American Journal of Public Health published a study indicating that 530,000 families declare bankruptcy each year as a result of illness or medical bills. According to this study, those who declared bankruptcy stated that medical bills amounted to 58.5% of the bankruptcies, and illness-related income loss contributed to 44.3%.
The Consumer Bankruptcy Project found similar figures in 2001 and 2007, and many debtors cited to multiple factors that contributed to their financial problems.
Unfortunately, it does not appear that the ACA has helped matters much when it comes to the number of people who declare bankruptcy. That is largely because bankruptcy is most common among middle-class Americans. Their deductibles and copayments have increased year after year, despite the ACA, whereas the poor, who are most helped by the ACA, do not typically seek bankruptcy relief because they have fewer assets to protect. They also have more difficulty securing legal help, which is needed to navigate a bankruptcy.
The lead author of the study, Dr. David Himmelstein, sums the situation up best: “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy. For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, copayments, and deductibles that illness can put you in the poorhouse. And even the best job-based health insurance often vanishes when prolonged illness causes job loss—just when families need it most. Private health insurance is a defective product, akin to an umbrella that melts in the rain.”