Bankruptcies Due To Health Care Costs Are Not Just For The Uninsured

I have written about out-of-pocket medical expenses many times on The HealthView Retirement Planning blog. My recent post, Health Care Costs In Retirement 101, explains in detail that health care costs are a significant expense even when a person has insurance.

This point is proven in The American Journal of Medicine’s recently published clinical research study shows that more than 62.1% of personal bankruptcies in 2007 were due to debt associated with health care costs. Most of the people who filed for bankruptcy are middle-class and college-educated homeowners. And 75% of them had health insurance.

The American Journal of Medicine study titled, Medical Bankruptcy in the United States, 2007: Results of a National Study reveals the following key findings:

Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%

When asked about problems that contributed very much or somewhat to their bankruptcy,
41.8% bankruptcies were due to a health problem
54.9% cited medical or drug costs
37.8% blamed income loss due to illness

Among common diagnoses, nonstroke neurologic illnesses such as multiple sclerosis were associated with the highest out-of-pocket expenditures, followed by diabetes, injuries, stroke, mental illnesses, and heart disease.

Hospital bills were the largest single out-of-pocket expense for 48.0% of patients, prescription drugs for 18.6%, doctors’ bills for 15.1%, and premiums for 4.1%. The remainder cited expenses such as medical equipment and nursing homes. While hospital costs loomed largest for all diagnostic groups, for about one third of patients with pulmonary, cardiac, or psychiatric illnesses, prescription drugs were the largest expense.

Chronic illnesses obviously take a serious toll on individuals, their families, and their finances as health care costs can be staggering. I encourage you to discuss your health risks with your doctors, and learn as much about health care expenses today and in the future so that you will be better prepared.