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Published on: February 16, 2011

Illness and injury as contributors to bankruptcy

David U Himmelstein1, Elizabeth Warren, Deborah Thorne

  • 1Harvard Medical School, Boston, Massachusetts, USA. dhimmelstein@challiance.org

Health Affairs (Project Hope)
|February 4, 2005
PubMed

Insights

Medical issues contribute significantly to bankruptcy filings, affecting millions of Americans annually. Even insured individuals face financial ruin due to high out-of-pocket medical costs and insurance lapses.

Area of Science:

  • Health Economics
  • Sociology
  • Public Health

Background:

  • In 2001, over 1.4 million American families filed for bankruptcy.
  • Medical expenses are a significant, yet understudied, factor in personal bankruptcy.
  • Understanding the link between illness and financial insolvency is crucial for public policy.

Purpose of the Study:

  • To investigate the prevalence and impact of medical causes on personal bankruptcy.
  • To quantify the financial burden of illness on bankrupt families.
  • To examine insurance status and coverage lapses among medical debtors.

Main Methods:

  • Survey of 1,771 personal bankruptcy filers across five federal courts.
  • In-depth interviews with 931 of the surveyed filers.
  • Analysis of self-reported medical costs and insurance history.

Main Results:

  • Approximately half of personal bankruptcy filers cited medical causes, suggesting 1.9-2.2 million Americans experienced medical bankruptcy.
  • Average out-of-pocket medical costs for those bankrupted by illness were $11,854.
  • 75.7% of medical debtors had insurance at illness onset, and they were 42% more likely to experience coverage lapses.

Conclusions:

  • Medical issues are a primary driver of personal bankruptcy in the United States.
  • High out-of-pocket medical expenses and insurance instability can lead to financial catastrophe, even for insured, middle-class families.
  • Policy interventions addressing healthcare costs and insurance accessibility are needed to prevent medical bankruptcy.

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