“Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy,” said Dr. David Himmelstein, associate professor of medicine at Harvard Medical School.  He described the situation as “frightening” in a news release issued by the Physicians for a National Health Program.  Himmelstein is lead author of a study to be published in the August 2009 issue of the American Journal of Medicine but the report can be found online now.

The study, conducted by researchers at Harvard’s medical and law schools, as well as researchers at Ohio University, found that, in 2007, two-thirds of all bankruptcies in the US involved medical expenses and related issues.  When compared to bankruptcies in 2001, the presence of medical issues in bankruptcies jumped by almost 50%.  Other findings include:

  • 77.9% of all American families bankrupted by medical expenses were covered by medical insurance at the onset of the medical crisis leading to bankruptcy.
  • 60% of those were insured by private insurers.
  • Most families were “solidly middle class” before financial disaster occurred.
  • Two-thirds of the adults filing for bankruptcies that included medical expenses owned their homes.
  • Three-fifths of them enjoyed a college education.
  • Even well-insured filers listed out-of-pocket medical expenses, including deductibles, co-payments, and uncovered services in amounts too high to cope with.
  • The average bankrupt family with private medical insurance identified $17,749 in unpaid medical expenses.
  • The average bankrupt family with no medical insurance coverage listed $26,971 in unpaid medical expenses.
  • The average bankrupt family with private insurance coverage at the beginning of the illness but lost it during the struggle had $22,568 in unpaid medical expenses.
  • Bankruptcy filings due to medical expenses were highest for those suffering from neurological disorders ($34,167, on average) and diabetes ($26,971).
  • The single biggest expense for about 50% of all families filing for bankruptcy was hospital bills.
  • Prescription drugs accounted for the largest single expense for 18.5% of bankruptcy filers.

The research team says it is important to note their study involves bankruptcies filed in 2007, before the current economic crisis began.  The percentage of bankruptcies and unsustainable medical expenses are likely to increase dramatically for more recent years.

Dr. Steffie Woolhandler, a primary care physician and associate professor at Harvard Medical School, says discussion of medical reform needs to go further than merely covering the uninsured.  Illness often strikes a family’s breadwinner and brings unemployment as a result.  When jobs are lost, so, in most cases, is medical insurance coverage although this is exactly when it’s needed the most.  Woolhandler is a co-author of the study.