A recent article authored by two professors of public health at the City University of New York, Drs. Himmelstein and Woolhandler, predict that the anticipated implementation of the Affordable Care Act (popularly known as Obamacare) in 2014 will not significantly reduce medical indebtedness and resulting medical bankruptcies. Even after full implementation, 30 to 36 million Americans will remain uninsured, according to the Congressional Budget Office. As for those who will have insurance coverage, the coverage mandated by the ACA is too limited to protect against the cost of an expensive illness.
MEDICAL BANKRUPTCIES AND INDEBTEDNESS PROBLEMS RISE
According to the doctors' article, illness and medical billscontributed to approximately half of all personal bankruptcies 1n 2001. By 2007, medical bankruptcies had risen to 62 percent. At the same time, the number of working-age adults (ages 19 to 64) reporting problems paying or unable to pay medical bills rose from 39 million to 53 million between 2005 and 2010. In 2010, approximately 30 million Americans were contacted by a collection agency about a medical bill.
THE MASSACHUSETTS EXPERIENCE
The public health professors surveyed debtors in Massachusetts before and after the implementation of that state's health reform. The health reform plan reduced the number of uninsured in the state by more than half and served as the prototype for the ACA. While the percentage of medical bankruptcies fell from 59 percent in 2007 to 53 percent to 2009, the six percent reduction was found to be statistically insignificant. In addition, the actual number of medical bankruptcies rose from about 7,500 to more than 10,000.
Why do many Massachusetts residents still suffer medical bankruptcies despite health care reform? The professors point out that the coverage provided by post-reform insurance carries hefty deductibles and co-pays for those not eligible for subsidies. These holes in insurance coverage leave families who experience a serious illness with medical bills they cannot pay.
ACA INADEQUATE TO SOLVE MEDICAL BANKRUPTCY PROBLEM
Himmelstein and Woolhandler conclude that to protect Americans from medical bankruptcies, insurance coverage must cover and pay for virtually 100 percent of all needed medical care. Under the ACA, however, insurance policies will be required to cover only 60 percent of expected health-care costs. They anticipate that the shortfall will leave tens of millions of Americans with large medical debts and drive more than a million into medical bankruptcy each year.
So what is the solution? Himmelstein and Woolhandler advocate a single-payer system, pointing to reduced rates of medical bankruptcies in Canada. However, a single-payer system, essentially Medicare for all, has been rejected by Congress in favor of the ACA and remains politically difficult. Others would probably argue for eliminating excessive medical indebtedness by reducing health-care costs, or at least their rate of increase, through less government involvement and greater competition among health-care providers. In any case, until further reforms are adopted, it seems clear that medical bankruptcies will likely continue.
If you are heavily in debt to one or more health-care providers and are considering a medical bankruptcy, you should contact an experienced medical bankruptcy attorney to evaluate your options and determine whether and under what chapter you should file for bankruptcy.