Medical Bankruptcy

Unexpected accidents and emergencies are a part of life.  Medical illness can be a financial nightmare leading to bankruptcy.  They can happen to anyone. Illness and medical bills contributed to more than half of bankruptcy filings, a new report shows.

"Illness often leads to financial catastrophe through loss of income, as well as high medical bills," writes researcher David U. Himmelstein, MD, professor of medicine at Harvard medical School. "Disability insurance and paid sick leave are critical to financial survival of a serious illness."

His report provides the first extensive data on medically related bankruptcy, Himmelstein writes in the journal Health Affairs. Previous studies have looked only at court records, where medical debts may be hidden in credit card or mortgage debt, he explains.  Study of this widespread problem has also been impeded by debtor's hesitation to discuss their bankruptcy. In surveys, only half of those who have gone into bankruptcy admit to it, writes Himmelstein. 

His study is based on a survey of debtors in bankruptcy courts -- a total of 1,771 bankruptcy filers. Of those, 931 bankruptcies were due to medical circumstances. Those citing medical causes were interviewed in depth regarding the medical diagnosis, health insurance, medical care, and expenses.