Homelessness and Healthlessness

Posted on | June 13, 2008 | Comments Off on Homelessness and Healthlessness

Connected at the hipAs the saying goes, one thing leads to another. One of the measurables that has been publicized over the years to help stimulate action in health system reform is the number of uninsured in America. But as the economic downturn expands, and people lose their jobs and their homes, the number of underinsured may actually provide the tipping point. The number of underinsured has increased 60% between 2003 and 2007, with one in five adults under the age of 65 currently affected.

Back in 1972, Senator Ted Kennedy laid this out in detail in his book, “In Critical Condition: The Crisis in America’s Health Care.” The facts haven’t changed for the better since then. Roughly one-sixth of the U.S. population more than 5 percent of their disposable income on health care. Approximately one-fifth at one point or another have been contacted by collection agencies related to their medical bills. And if you or a family member are unlucky enough to contract a terminal illness, there is a four in 10 chance of a severe financial crisis in your future.

An examination of more than 1,700 U.S. debtors who declared bankruptcy in 2001 shows obvious examples of the gradual, downward, often health-related financial slide they experienced in the two years prior to filing. Out of the debtors with health issues, 38 percent had a lapse in insurance in the two-year lead up. 60 percent avoided a necessary visit to the doctor or dentist, and 47 percent did not fill a prescription they had been given.

Looking at the entire group, 28 percent cited illness or injury as their specific cause of bankruptcy. But nearly half (46%) met at least one of the four criteria for “major medical bankruptcy.” The criteria include illness or injury as a direct cause of insolvency, uncovered medical bills exceeding $1,000, two weeks of work lost to illness or injury, or a history of mortgaging the home to pay medical bills.

For that 28 percent whose illness drove them toward bankruptcy, who was sick in the family? Eight out of 10 times it was the parent. In these cases there was usually a double financial hit – lost wages accounting for 65 percent of the financial loss and unplanned medical bills accounting for 35 percent of the loss. In 13 percent of the cases, a child was ill, and in 8 percent, it was an elderly family member. As for the illnesses that lead to medical bankruptcy in these families, the most common diagnoses include cardiovascular disease, trauma, orthopedic and back problems; and cancer, diabetes, pulmonary disease, psychiatric disorders, and childbirth-related and congenital disorders.

Surprisingly, most of those who eventually slid into medical insolvency were initially insured. More than 75 percent had coverage prior to their illness or injury. In 60 percent of the cases, the coverage was private, with one-third losing the coverage when they stopped working due to illness. Fifty-six percent could no longer afford insurance premiums, and 7 percent couldn’t get new insurance due to preexisting medical conditions. On average for all of the debtors citing medical reasons for bankruptcy, the mean out-of-pocket expenditures from time of illness to bankruptcy was a surprisingly low $11,854.

The truth of the matter is that if you are a working American, low or middle class without significant savings and disability insurance, and you fall prey to a common illness that prevents you from drawing a salary, unpaid medical bills approaching the $10,000 threshold will likely cause you to consider bankruptcy to keep a roof over your family’s head. Such vulnerability, along with our 45+ million citizens who are completely uninsured, fundamentally undermines societal values. The subprime push was justified by the policy goal of creating an “ownership society.” The reality is that homelessness and healthlessness are connected at the hip, and that being underinsured places you at nearly the same risk as having no insurance at all.