Most Driven Into Debt by Medical Bills HAVE Health Insurance → Washingtons Blog
Most Driven Into Debt by Medical Bills HAVE Health Insurance - Washingtons Blog

Tuesday, December 14, 2010

Most Driven Into Debt by Medical Bills HAVE Health Insurance

Most driven into debt and bankruptcy by medical bills have health insurance. For example, Reader's Digest notes:
Between 2000 and 2003, seven in ten adults who were driven into debt by medical expenses had insurance at the time.
Similarly, as of 2009:
More than 2.2 million California adults report having medical debt, and two-thirds of those incurred the debt while insured, according to the authors of "The State of Health Insurance in California (SHIC)," a comprehensive new report from the UCLA Center for Health Policy Research.
And as the Washington Post pointed out last year:

Sixty-two percent of all bankruptcies filed in 2007 were linked to medical expenses, according to a nationwide study released today by the American Journal of Medicine. That's nearly 20 percentage points higher than that pool of respondents reported were connected to medical costs in 2001.

Of those who filed for bankruptcy in 2007, nearly 80 percent had health insurance.
Why is this happening?

Above and beyond the fact that health insurers nickel and dime everyone by trying to exclude necessary medical care from coverage (you've heard the horror stories), there are two additional reasons:
(1) People think that they are covered, and so authorize more health care than they would if they knew in advance that they would have to pay for it out of their own pocket;


(2) People are underinsured, and can't afford to buy an adequate level of insurance for their needs.
As an interesting historical sidenote, the Nixon administration helped to launch the whole HMO concept. Specifically, as Michael Moore told Democracy Now last month:
[My researcher] found this Watergate tape—has nothing to do with Watergate, it’s one of the Nixon tapes—at the Archives, National Archives, where Nixon and Ehrlichman are discussing whether or not to support this HMO concept. And Ehrlichman says to Nixon, "You’re going to love this, because this is private enterprise. This isn’t like some freebie thing." Nixon goes, "Oh, I like that. Tell me about it." And then Ehrlichman says, "Well, this is how it’s going to work, these HMOs. They’re going to make more money by providing less care. The less care they give them, the patients, the more money the company makes." Nixon goes, "Ooh, not bad!" And it’s all there on tape.
In the same interview, former top Cigna health insurance executive Wendell Potter confirmed to Democracy Now, "I do know that tape".

Note: The effect of the new health care bill on this issue is beyond the scope of this essay.


  1. Life is getting tougher and tougher. It used to be that you were willing to trade your time and energy so that you could take care of yourself and your family, but it just seems impossible anymore. Even IF you are lucky enough to have a job and health insurance you still can't afford to live! I read this great article on ways to live cheaper - a lot cheaper at Naked on a Strange Planet Be happier and have more with less! I think it's a great idea!

  2. Stockman has come closest to saying that reducing interest rates on consumer credit card debt, as long as consumer debt is actually reduced month after month, would work, of any public figure that I can recall.

    Stockman says that by basically condemning all other plans. He sort of sounds like he is for increasing taxes on the rich to what they used to be, but I believe that is only because he is not allowed to talk about real solutions.

    Banksters lie about credit card interest rates

  3. The simple answer is that most people have zero savings while all health insurance has co-pays, a deductible, and a co-insurance requirement. The fact is that if you have any kind of major illness or hospitalization it is going to cost you thousands and thousands. Thus, if you have no savings, it should come as no surprise that the medical bills will bankrupt you.

    It has always been that way, regardless of whether you think "that health insurers nickel and dime everyone by trying to exclude necessary medical care from coverage (you've heard the horror stories). You can fault the stingy health insurance companies but one has to realize that the carrier starts right off paying three to five times what the insured is paying. Once the insured pays to the his limit, per the policy, the carrier is on the hook for every penny charged to the patient with no lifetime limit... all the way to infinity, theoretically. As of sept 23, 2010 carriers were prohibited from capping the lifetime limit on a policy.

  4. We need to get it out of our heads that Insurers pay for claims, at any point, with their money.
    All claims, all expenses, come from premium dollars with insurers acting as middle-men. By denying payments, for any reason, they earn more money for themselves and do not provide more care because of more profits earned from cutting

  5. Health insurance provides you chance to compare au insurance quotes instantly from other companies and provide a way for save the human life for long time.So i think health insurance is a great idea for the save for the human life.

  6. Philly is right, life is getting tougher and tougher and we need to take care of ourselves. But we have to work hard as well to have a better living or to give our family better life also. So, to assure our health we compare Medicare supplement plans to learn which the best is for us and for our budget. I guess people that have huge debt are the ones who do not know how to budget and save.

  7. Interesting figures! Seems that bankruptcy caused by high medical expenses increased over the last years. In “Medical Bankruptcy in the United States, 2007: Results of a National Study.” Elsevier, Inc., 2009 the figures were much higher: 62, 1% of of all bankruptcy cases filed were caused by high medical expenses!


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