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Recovering from Medical Bankruptcy

, Recovering from Medical Bankruptcy

Unpaid medical bills are the single largest cause (approximately 60%) for new bankruptcy filings in the United States. This stems primarily from the private health insurance industry and its often direct ties to a worker’s employer, which in turn means that when people lose their jobs, they also lose their health insurance benefits. Full-time positions with health insurance benefits are now scarce relative to the working population and families frequently find themselves at a loss when dealing with serious injuries or illnesses. What happens then? How can families get back on track and minimize the damage done to their credit ratings and personal ambitions?

For many, at least part of the answer may lie in new healthcare reform legislation. The Affordable Care Act (also known as Obamacare or the ACA) of 2010 was designed in part to broaden access to healthcare services for millions of previously uninsured American citizens. By mandating that employers with more than 50 full-time employees provide health insurance benefits to their full-time staff, the Affordable Care Act takes a large step toward increasing the likelihood that Americans can go to the doctor when they get sick without worrying about medical bankruptcy. Many of these public health insurance option packages (such as the online marketplace, the Small Business Health Options Program, or SHOP) still have very high deductibles and high out-of-pocket maximums (the most a family can be required to pay in a given year) relative to the mean per capita income. This means that for many Americans, medical bankruptcy is still a very real threat, even for those with some form of health insurance.

The Affordable Care Act also does not address the job loss-fueled lack of health insurance coverage that leads to so many medical bankruptcy claims. In moving forward, many public health advocates have called for universal coverage, a system of health insurance in which all citizens fund public coverage through taxation and receive health insurance in return. Universal coverage has been met with fierce opposition in the US political arena, but public opinion has gradually been shifting in its favor due to the stress that tens of millions of uninsured American citizens have placed on the US healthcare delivery system.

Unfortunately, any new legislation regarding universal coverage will be too late for families who have already found themselves unable to pay their medical bills. In the interim, there are crowd sourcing efforts being funded by both private and public companies and individuals that are dedicated to paying off medical debts for families. Although this certainly does not represent a sustainable solution (many families go un sponsored), it does provide a means of support until universal coverage can be realized.

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