Clinical research study
Medical Bankruptcy in the United States, 2007: Results of a National Study

https://doi.org/10.1016/j.amjmed.2009.04.012Get rights and content

Abstract

Background

Our 2001 study in 5 states found that medical problems contributed to at least 46.2% of all bankruptcies. Since then, health costs and the numbers of un- and underinsured have increased, and bankruptcy laws have tightened.

Methods

We surveyed a random national sample of 2314 bankruptcy filers in 2007, abstracted their court records, and interviewed 1032 of them. We designated bankruptcies as “medical” based on debtors' stated reasons for filing, income loss due to illness, and the magnitude of their medical debts.

Results

Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.

Conclusions

Illness and medical bills contribute to a large and increasing share of US bankruptcies.

Section snippets

Methods

We used 3 data sources: questionnaires mailed to debtors immediately after bankruptcy filing; court records; and telephone interviews with a sub-sample of debtors.

Results

The demographic characteristics of our sample are shown in Table 1. Most debtors were middle aged, middle class (by occupational prestige),5 and had gone to college. Their modest incomes reflect the financial setbacks common in the peri-bankruptcy period. Two thirds were homeowners.

Compared with other debtors, medical debtors had slightly lower incomes, educational attainment, and occupational prestige scores; more were married and fewer were employed (reflecting more disability). Medical

Discussion

In 2007, before the current economic downturn, an American family filed for bankruptcy in the aftermath of illness every 90 seconds; three quarters of them were insured.

Since 2001, the proportion of all bankruptcies attributable to medical problems has increased by 50%. Nearly two thirds of all bankruptcies are now linked to illness.

How did medical problems propel so many middle-class, insured Americans toward bankruptcy? For 92% of the medically bankrupt, high medical bills directly

Acknowledgments

Additional support came from Harvard Law School and the American Association of Retired Persons. Professors Melissa Jacoby, Robert Lawless, Angela Littwin, Katherine Porter, John Pottow, and Teresa Sullivan played key roles in the Consumer Bankruptcy Project.

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Funding: Supported by Grant #56590 from the Robert Wood Johnson Foundation, Princeton, NJ.

Conflict of Interest: None.

Authorship: All authors had access to the data and a role in writing the manuscript.

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