Wednesday, July 22, 2009

Medical Bankruptcy

I came across this very interesting article in our July09 Agency Review. It comment about the financial stress due to critical illness and medical cost.

Medical Bankruptcy in the United States,2007: Result of a National Study
Background: Our 2001 study in 5 states found that medical problem contributed to at least 46.2% of all bankruptcies.Since then,health costs and the number of uninsured and under insured have increased,and bankruptcy laws have tightened.

Methods:We surveyed a random national sample of 2314 bankruptcy filers in 2007,abstracted their court records,and interviewed 1032 of them.We designated bankruptcies as "medical"based on debtors' stated reasons for filling,income loss due to illness and the magnitude of their medical debts.

Results:Using a conservative definition ,62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income.The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills.Most medical debtors were well educated,owned homes and had middle-class occupations.Three quarters had health insurance.Using identical definitions in 2001 and 2007,The share of bankruptcies attributable to medical problems rose by 49.6%.In logistic regression analysis controlling for demographic factors,the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.

Conclusions:Illness and medical bills contributed to a large increasing share US bankruptcies. Transfer the risk to a insurance company. Take up a medical insurance policy.