Behind The Sound Bite: Medical Bankruptcy
At a recent forum that advocated for a single-payer health care system, state Sen. Jamie Eldridge, D-Acton, said that medical debt is the biggest driver of bankruptcy in America. We decided to look into that statement to see if it was actually true. While some of the data supporting the claim is old, it is clear that medical expenses are causing more bankruptcies than in years past.
What are the numbers?
In 2007, four researchers at Harvard and Ohio universities released results of a nationwide study of individuals who filed for bankruptcy. Using court filings and interviews with debtors, the study found that 62.1 percent of bankruptcies out of a group of more than 1,000 randomly-selected debtors were caused in some part by a medical condition.
How have the numbers changed?
The study noted that in 1981, 8 percent of bankruptcies were caused by medical-related issues. By 2001, it was half and by 2007, it rose to 62 percent.
What are some other causes of bankruptcy?
While the Harvard study does not address other causes of bankruptcy, The Thistle Finance Group, which is a nationwide debt servicing firm, cited its top five causes of bankruptcy. The firm sites the 2007 Harvard study, which shows that medical expenses are the most common cause of bankruptcy. Second is job loss, followed by uncontrolled spending, divorce and finally unexpected disaster.
Does anyone disagree?
There have been some academics that have questioned the results of the 2007 Harvard study. For one, the study was done in 2007, before the economy crashed, and particularly the housing market. So, it’s unclear how the economic downturn has impacted bankruptcy filings since 2007. Gail Heriot, a professor of law at the University of San Diego, also argues that in the 2001 version of the study, researchers had a broad definition of medical conditions, which included gambling, drug and alcohol addiction.
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