# Half of US personal bankruptcies are caused by medical bills? **URL:** \ **Category:** Factual Questions\ **Created:** [July 16, 2006, 3:52pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748 "2006-07-16T15:52:50Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [July 16, 2006, 3:52pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/1 "2006-07-16T15:52:50Z")
**Little Plastic Ninja’s** [pit thread](http://boards.straightdope.com/sdmb/showthread.php?t=379714) reminded me of a question I’ve been meaning to ask. Occasionally in the papers, I’ve seen the statement that about half of the personal bankruptcies in the U.S. are caused by an inability to pay medical bills. That seems so extreme to me that I always want to say “Cite?”, but of course the news papers don’t have a “reply” button. So, does anyone know if that’s an accurate statisitic? ---
**Author:** ![Burrido](https://avatars.discourse-cdn.com/v4/letter/b/3be4f8/32.png) [@Burrido](https://boards.straightdope.com/u/Burrido)\ **Post date:** [July 16, 2006, 4:07pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/2 "2006-07-16T16:07:47Z")
> **[Medical Bills Leading Cause of Bankruptcy, Harvard Study Finds](https://www.consumeraffairs.com/news04/2005/bankruptcy_study.html)** > > Medical Bills Leading Cause of Bankruptcy, Harvard Study Finds > **[MPR: Bankruptcy bill could be a pain for people with high medical costs](http://news.minnesota.publicradio.org/features/2005/04/12_scheckt_bankruptcy/)** > > Congress is poised to give final approval to the biggest changes in the nation's bankruptcy laws since 1978. The bill would make it tougher for consumers to wipe out their debts and start their financial lives from scratch. The measure could affect... ---
**Author:** ![Chefguy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chefguy/32/138_2.png) [@Chefguy](https://boards.straightdope.com/u/Chefguy)\ **Post date:** [July 16, 2006, 4:09pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/3 "2006-07-16T16:09:17Z")
Don’t know how accurate. A personal note: when I worked as an RV salesman, one of the questions you ask a customer who is planning to finance is whether he has had any bankruptcies in the past 10 years. Often as not, when the answer was ‘yes’, the reason given was catastrophic illness. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [July 16, 2006, 10:25pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/4 "2006-07-16T22:25:36Z")
Bankruptcy due to catastrophic illness is not the same as Bankruptcy due to medical bills. I’d bet the common scenario is somebody becomes too ill or injured to work & loses their job. Their meager savings are eaten by rent & groceries within a couple of days / weeks / months, then it’s just a rapid descent into debt until MasterCard gets tired of subsidizing living expenses. Around then all the mediacl bills arrive since health insurance, if any, ended when the job did. So they declare bankrupcy with zero assets, no job, little or no employability, a bunch of credit card bills for living expenses & a bunch of medical bills for treatment. Was it the medical bills that “caused” the bankrptcy? Not the way I see it. The med bills may have been the coup de grace that made the debtor realize it was waay beyond hopeless, but they were going to declare bankruptcy even if somebody else covered the med bills 100%. Most people simply cannot go several months without income & survive financially. All the more so if they have an ongoing health issue that makes employment hard to get or keep afterwards. ---
**Author:** ![smile4me2222](https://avatars.discourse-cdn.com/v4/letter/s/cab0a1/32.png) [@smile4me2222](https://boards.straightdope.com/u/smile4me2222)\ **Post date:** [July 16, 2006, 10:45pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/5 "2006-07-16T22:45:42Z")
> [@LSLGuy](#): > > Bankruptcy due to catastrophic illness is not the same as Bankruptcy due to medical bills. > I’d bet the common scenario is somebody becomes too ill or injured to work & loses their job. Their meager savings are eaten by rent & groceries within a couple of days / weeks / months, then it’s just a rapid descent into debt until MasterCard gets tired of subsidizing living expenses. > > Around then all the mediacl bills arrive since health insurance, if any, ended when the job did. > > So they declare bankrupcy with zero assets, no job, little or no employability, a bunch of credit card bills for living expenses & a bunch of medical bills for treatment. > > Was it the medical bills that “caused” the bankrptcy? > > Not the way I see it. The med bills may have been the coup de grace that made the debtor realize it was waay beyond hopeless, but they were going to declare bankruptcy even if somebody else covered the med bills 100%. > > Most people simply cannot go several months without income & survive financially. All the more so if they have an ongoing health issue that makes employment hard to get or keep afterwards. I agree. When people run into financial problems, medical bills are one of the first things they stop paying. In my experience, most people will pay their cable TV bill before they pay their medical bills. Because the consequences of not paying the cable bill are a lot more immediate. So it’s not surprising that a lot of bankruptcy filings list medical bills as outstanding debts. Also, if you ask people why they are filing bankruptcy, nobody is going to say “well, I was living beyond my means and that plasma TV put me over the edge.” Of course they will cite job loss and medical bills even if it’s an exaggeration or a lie. ---
**Author:** ![Harmonious\_Discord](https://avatars.discourse-cdn.com/v4/letter/h/74df32/32.png) [@Harmonious\_Discord](https://boards.straightdope.com/u/Harmonious_Discord)\ **Post date:** [July 16, 2006, 10:53pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/6 "2006-07-16T22:53:51Z")
I went 2 years only averaging 24 hours a week down from 40, before I couldn’t work anymore. That’s a big drop in income. Add in more expenses due to illness. I lasted 11 months more not working and paying housing, food, energy, and medicine copayments. No other bills were payed during the 11 month period. That was the end. It’s never straight medical bills, it’s all the consequences of being sick together. They statement is more acurate stated as "Half of all bankruptcies occur as a result of having a medical crisis of any but short term indurance. ---
**Author:** ![HMS\_Irruncible](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hms_irruncible/32/7394_2.png) [@HMS\_Irruncible](https://boards.straightdope.com/u/HMS_Irruncible)\ **Post date:** [July 17, 2006, 2:12am UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/7 "2006-07-17T02:12:18Z")
It sounds like a more accurate statement would be that 100% of bankruptcies are caused by not having enough money to pay one’s obligation, and that in 50% of bankruptcies, the major creditor left holding the bag is a medical provider. ---
**Author:** ![R.P.McMurphy](https://avatars.discourse-cdn.com/v4/letter/r/7993a0/32.png) [@R.P.McMurphy](https://boards.straightdope.com/u/R.P.McMurphy)\ **Post date:** [July 17, 2006, 2:44am UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/8 "2006-07-17T02:44:44Z")
Recently, “60 Minutes” did a segment on the way medical services are billed. While the law says that the hospitals cannot bill the same services at different rates, the insurance providers and Medicare negotiate what they will actually pay. Therefore, just like car dealers, there is the sticker price and the actual price paid. The people who do not have health insurance and don’t qualify for government assistance sometimes get stuck. They are billed at the “sticker price” even though that might be several multiples of what and insurance company or Medicare will pay for the same services. A $10,000 procedure for the insurance company can be a $40,000 bill for an uninsured person. If it’s something like a transplant, the bill can drive an otherwise responsible, working person or household into bankruptcy. The fact of the medical system driving people into bankruptcy is often a fault of the system, not because people are deadbeats. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 17, 2006, 3:19am UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/9 "2006-07-17T03:19:20Z")
You guys read the cites? From the first cite in post 2. > [@](#): > > Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy. > > Most of the medical bankruptcy filers were middle class; 56 percent owned a home and the same number had attended college. In many cases, illness forced breadwinners to take time off from work – losing income and job-based health insurance precisely when families needed it most. > > Families in bankruptcy suffered many privations – 30 percent had a utility cut off and 61 percent went without needed medical care. > > Uncovered medical bills averaged $13,460 for those with private insurance at the start of their illness. People with cancer had average medical debts of $35,878. Slightly more than a cable bill, I’d suspect. It’s not surprising the medical bills don’t get paid - someone with an illness can’t even make a dent in paying them. My wife has had several eye operations - summing to probably $40K. Happily I have good insurance, but I look at some of the other people in the doctor’s office, and wonder how they pay for it. I agree with **Spartydog** - the system is badly broken. ---
**Author:** ![muttrox](https://avatars.discourse-cdn.com/v4/letter/m/a8b319/32.png) [@muttrox](https://boards.straightdope.com/u/muttrox)\ **Post date:** [July 17, 2006, 3:25pm UTC](https://boards.straightdope.com/t/half-of-us-personal-bankruptcies-are-caused-by-medical-bills/364748/10 "2006-07-17T15:25:47Z")
I believe Elizabeth Warren is the researcher/writer who has most popularized these findings. Pretty sure she has a new book out about it.