Story of the Week | September 30, 2008

The Financial Crisis and Medical Bankruptcy

Will the financial crisis accelerate medical bankruptcy?

By Mike Magee, MD

As we've learned over the past few weeks, America's finances have been massively mismanaged in the wake of intentional dismantling of our historic checks and balances. What we've also been forced to acknowledge is that our economy, on a national and global level, is an extraordinarily integrated affair. Everything, it seems, is tied to everything else. The great fear, voiced repeatedly by pundits this past week, is that "what has happened on Wall Street will spread to Main Street." But the reality is, it already has.

On September 24, 2008, two studies were released that demonstrated health care costs, for both insured and uninsured, were pushing increasing numbers of American families to bankruptcy. The Kaiser Family Foundation and the Center for Studying Health System Change say the studies "underscore the mounting additional strain that medical care is placing on working Americans." As Drew Altman, president of the Kaiser Family Foundation, said, "The problems people are having paying for health care and health insurance are a central dimension of the economic and pocketbook concerns right now." Total cost for family coverage averages $12,680, up 5% from 2007 for insured employees. The employees now contribute 27% of that, or $3,354. The studies show that this is enough to push many families to the brink. One in five had trouble paying their medical bills last year with half of them borrowing money to pay the bills and 20% contemplating bankruptcy.

You wouldn't think that a premium of $3,354 a year could do that. But you have to add in co-pays and add-ons for those unlucky enough to confront an illness. Together these costs reach the "breaking point". And as I outlined in a Health Politics piece back in 2006, that breaking point is low, and getting lower, as citizens have amassed additional debt.

To learn more about how medically related bankruptcy occurs, watch this week’s video, included with this blog post – it’s taken from our Health Politics archives. You’ll need to visit the Health Politics website to watch this video.

The studies released last week estimate that 57 million Americans, 75% of whom are insured, are straining to pay medical bills. As Karen Davis of the Commonwealth Fund remarked, "It's a serious health problem and a serious economic problem. What we're seeing is families are not in a position to shoulder the financial risk.” The question now: "Is it possible to stabilize the financial disarray of Wall Street without addressing the health system disarray of Main Street in tandem?”

Transcript

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Related Websites


	Worst Crisis Since the 30's, With No End In Sight
	This article from the Wall Street Journal lays out the facts.
	http://online.wsj.com/article/SB122169431617549947.html

	Employer Health Benefits 2008 Annual Survey
	Kaiser Family Foundation Study examines trends in employee-sponsored health coverage.
	http://ehbs.kff.org/

Topic Tags: health care reform, insurance, Mike Magee

by Health Commentary

Comments

October 01, 2008

The financial crisis and medical bankruptcy

I know many people are trying to use the scare tactic on health insurance but I really don't want government telling me what dr. I can see and when I need taken care of. They can't even take care of the business at hand.

by Georgia

October 02, 2008

Comment From Physician in Phoenix, AZ

Rich Doliner M.D., a physician from Phoenix, AZ had this to say in response to my piece on "Medical Bankrupcy":

Mike,

I often read your articles. They are very good. We have met in the past at an AACE Meeting (American Association of Clinical Endocrinologists). I just completed my term on the Board this year.

I wanted to point out an error in your article. You state "Total cost for family coverage averages $12,680, up 5% from 2007 for insured employees. The employees now contribute 27% of that or $3,354."

The employees don't contribute 27%. They contribute 100%. That other 73% is paid by the employer with the money that the employee earns. It is the employee's money not the employer's. To describe it any other way gives a false impression and leads people to erroneous conclusions.

Best regards,

Rich

Thanks, Rich! This is a very interesting take, especially with all the debate over the past two weeks regarding Main Street and Wall Street, and who's bailing out who. It's an issue of fairness, isn't it? If you work for someone, and your hard work contributes to your firm or company or shop's success, your compensation (including health care insurance for many), has been paid for, as you suggest by your labor. Or at least that is many workers' understanding. In reality, of course, both the financial compensation, the quality of the benefits, and the overall security of the job itself has been progressively chipped away at over these past year, and for a sizable portion now, may abruptly cease to exist. As we look to resolve the immeadiate crisis, we need to examine the broader issue of work, security, productivity, and health as an aspiration to achieve full human potential for oneself and one's family. What are the modern roles and responsibilities of the individual, the family, the community, the government, the corporation, and non-profit organizations? What kind of Society do we want for the 21st century?

Mike

by Mike Magee