Bankruptcy medical debt

bankruptcy medical debt

Bankruptcy medical debt

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“I want to file medical bankruptcy.” I get that phone call a lot. The situation is that many people are current on their house, car and credit card payments, but they were hit by a wave of medical bills and just want to file bankruptcy on those debts. Can a person just file bankruptcy on medical debts? Is there such a thing as medical bankruptcy?

Technically, there is no such thing in the law as medical bankruptcy, and there is no way to file bankruptcy by only listing medical debts. When you file bankruptcy all debts are listed. In fact, when somebody files bankruptcy they sign a sworn statement that says, under penalties of perjury, that they have listed ALL their debts.

When someone says they filed medical bankruptcy what they mean is that they filed not because of irresponsible spending but because of something beyond their ability to control–their health. You hear the term medical bankruptcy a lot for good reason.

  • 56M Americans under age 65 will have trouble paying medical bills

– Over 35M American adults (ages 19-64) will be contacted by collections agencies for unpaid medical bills

– Nearly 17M American adults (ages 19-64) will receive a lower credit rating on account of their high medical bills

– Over 15M American adults (ages 19-64) will use up all their savings to pay medical bills

– Over 11M American adults (ages 19-64) will take on credit card debt to pay off their hospital bills

– Nearly 10M American adults (ages 19-64) will be unable to pay for basic necessities like rent, food, and heat due to their medical bills

  • Over 16M children live in households struggling with medical bills
  • Despite having year-round insurance coverage, 10M insured Americans ages 19-64 will face bills they are unable to pay
  • 1.7M Americans live in households that will declare bankruptcy due to their inability to pay their medical bills

    – Three states will account for over one-quarter of those living in medical-related bankruptcy: California (248,002), Illinois (113,524), and Florida (99,780)

  • To save costs, over 25M adults (ages 19-64) will not take their prescription drugs as indicated, including skipping doses, taking less medicine than prescribed or delaying a refill
  • “Medical Bankruptcy” is really Chapter 7 or Chapter 13 Bankruptcy.

    When someone says they filed medical bankruptcy they really mean to say they filed Chapter 7 or Chapter 13 bankruptcy. All debts must be listed, even the ones you want to keep, such as auto and mortgage debts. However, this is not really a big problem you can sign Reaffirmation Agreement in Chapter 7 cases to keep and revive the debts you want to keep. A Reaffirmation Agreement basically pulls a debt out of the bankruptcy case so that you can keep the car, home, etc, and continue the benefit of getting positive credit reporting.

    Ongoing Medical Bills: The benefit of Chapter 13 cases.

    I meet many clients who suffer from ongoing medical problems. Even if they file Chapter 7 today to wipe out the medical bills, in six months they are right back where the started with new medical debts. They may lack health insurance or the insurance they have contains loopholes that don’t cover certain medical treatments. Such individuals may benefit from the extended protection of Chapter 13. Chapter 13 cases can be open from 3 to 5 years and may eventually be converted to Chapter 7 to add new medical bills that accrued during the bankruptcy. While a person is in Chapter 13 creditors may not garnish paychecks or bank accounts. In some ways, Chapter 13 is something of a drastic form of health insurance.


    Bankruptcy medical debt

    This report is part of an ongoing effort by a group of health care practitioners, lawyers, researchers, and activists to expose the disastrous impact of medical debt and for-profit health care on families and individuals in the United States. Private health care enriches a few—insurance companies, private equity firms, pharmaceutical companies, debt collectors, and global investors—at the expense of everyone else. Medical debt is a weapon of the class war because when patients cannot afford medical care, they are forced into debt, often with far-ranging and catastrophic consequences. As the rate of uninsured has grown, local governments have looked to state subsidies for private health insurance as a band-aid solution. Massachusetts has implemented such a program, and the Obama Administration’s Affordable Care Act has expanded this initiative on a national scale. Unfortunately, the ACA will not solve the problem because its primary goal is to expand the market-based system that has already proved to be a miserable failure. Insurance companies profit by denying coverage. As costs rise and benefits shrink, patients will continue to pay the price. We are in a major health care crisis, the consequences of which will be felt for decades to come. The only real solutions are: a grassroots social movement to demand universal health care, an end to the scourge of medical debt, and a national conversation on the meaning of health and wellness.

    The price of for-profit medical care is increasing at a relentless pace while quality is declining. Fifty million people have no insurance and 77 million have trouble paying medical bills (Rukavina). Despite these inequities, the US spends more on care than any other wealthy country in the world. The for-profit health care industry sucks up 18% of Gross Domestic Product, more than twice what countries that have publicly-financed health care spend. Despite the high cost, Americans are sicker and die earlier than people in other developed nations (“Shorter Lives”).

    People without insurance must privately finance health care. Less well understood, however, is that medical debt is not only a problem for those without coverage. One in five adults who are privately insured struggles to pay medical bills. Even more scandalous is the fact that Americans are paying more for weaker coverage (“Shorter Lives”). According to the Commonwealth Fund, the cost of insurance has outpaced wage increases for the last ten years. Employers are shifting these costs to employees and their families. Premiums increased 62% from 2003 to 2011 (“State Trends”). For at least ten million Americans, deductibles are so high that their insurance plans are little more than scams, providing a false sense of security in hard times (Young).

    The cost of health care has also risen faster than inflation. As a result, over the last few years, families have had little choice but to accept lower wages to hold on to benefits that, in the case of a serious illness or accident, may not protect them from financial disaster. For many working people, the trade-off is simple: your money or your life. If you have a job and insurance, you may feel that you are protected. But that is false. No one is truly safe from a for-profit health care industry that preys on patients and families at the most vulnerable moments. Since insurance companies and for-profit providers also fund political campaigns, we can expect no help from politicians. The best hope we have is to ally with others in our circumstances to fight back and claim health care as a human right.

    Almost everyone is affected by medical debt. The for-profit health care industry is designed to benefit a few at the expense of the rest. Debtors and non-debtors alike are forced to pay out-of- pocket for everything from basic care to life-saving operations. As patients, most of us understand instinctually that someone is making out like a bandit when we get sick. This becomes clear the minute you walk into a doctor’s office or a hospital where you open your wallet to make an up-front payment, sometimes called a co-pay, before seeing a doctor. The costs can start piling up from there, even if you have insurance. If you have a serious illness or accident, it’s unlikely that your insurance will cover all—or even most—of the care you need. What insurance doesn’t pay, you’re responsible for. Predictably, medical debt discriminates along familiar lines. According the Commonwealth Fund,

    Among the working-age population, 39% of women have medical bill problems, compared with just 25% of men. More than half of working-age African Americans (52%) report medical bill problems, in contrast with 34% of Hispanics and 28% of whites (“Seeing Red”).

    Although medical debt affects some more than others, it cuts across lines of class, race, and gender. In fact, rates of medical indebtedness are comparable for people with and without insurance (“Consequences”). Insurance companies make a profit by denying claims. In the words of Dr. David Himmelstein, of Physicians for a National Health Program,

    Private health insurance is akin to an umbrella that melts in the rain. It simply isn’t there for you when you most need it

    How long are we willing to stand under our worthless umbrellas and pray that it doesn’t rain? Many health plans don’t cover all the treatments for a serious illness or accident. Others limit the total amount of benefits or require absurdly high deductibles, putting necessary care out of reach for people who believe they are protected (“Seeing Red”). According to the Access Project, a non-profit research and advocacy organization,

    Americans spent $300 billion on out-of-pocket costs in 2010; a figure over and above the cost of health insurance premiums (Rukavina).

    People will say that we can’t afford universal health care, that those of us who believe otherwise are living a foolish dream. But they are wrong. The dreamers have it right this time. We’re not making an argument about affordability or appealing for the creation of what some call the “Welfare State.” We’re saying that it is time to pay attention to the overwhelming evidence that for-profit health care is killing us. It’s time to wake up from our national health care nightmare.

    Who is paying the price for our profit- based system? It may be obvious that low-income people pay a higher percentage of their income for health care. But the young are also at a high risk for incurring medical debt. This is because those from the ages of 19 to 29 are more likely to lack health insurance

    than older Americans. Many low-wage employers that hire young adults do not provide coverage, and since the 2008 financial crisis, new college graduates have disproportionately high rates of unemployment and underemployment. Through a toxic combination of college loans, medical debt, and a recession caused by banks, many people’s financial lives are ruined before they are even out of their twenties. Is this what we want for young people in America? The evidence that publicly-funded care is far better than our current system is staggering.

    It turns out, when it comes to medical debt, it is better to be over 65 and sick than to be young and healthy (Garcia). Older people actually have the lowest rates of medical debt because they qualify for government-supported programs like Medicare. From the right and left of the political establishment, we hear no end of fearmongering about “socialism” and how awful it would be if health care became a public benefit, like it is in many countries around the world. But the truth is that Americans on Medicare and Medicaid are much less likely to lay awake at night fearing that the next medical procedure will force them into bankruptcy or foreclosure. It’s time to rethink what obligations we owe to the young, what kind of promises we want to make to those who come after us, and how we intend to keep them.

    Bankruptcy is often presumed to be the result of profligate living by consumers who overspent on luxury items. Don’t live beyond your means is common advice, as if personal responsibility is the only thing that matters in an economy that almost collapsed only 5 years ago. In fact, people are being forced into bankruptcy in America because they had the audacity to get sick without millions of dollars in the bank. Or, they believed their private health plan would protect them from the worst. By the time many realize that for-profit health care is a hoax, it’s too late. The crisis is gaining steam. Just 30 years ago, debtors rarely filed for bankruptcy as a result of a medical problem. Today, an astonishing 62% of personal bankruptcies are linked to medical debt.

    The link between medical debt and bankruptcy also shatters the myth of personal responsibility that makes many of us feel as if we are to blame if we can’t afford basic needs. According to a report in the American Journal of Medicine, most people who declare bankruptcy as a result of medical debt had insurance at the time they incurred the debt (Himmelstein). Furthermore, the majority of medical debtors who declared bankruptcy attended college, owned their own home, and had middle-class jobs. They did everything “right,” yet they were still financially devastated when a member of their family got sick or had an accident.

    You might think that a sharp uptick in the number of medical debtors filing for bankruptcy would prompt the government to step in. After all, no one chooses to go into medical debt. Yet, our delusional Congress assumed people were abusing the bankruptcy law when their lives were turned upside down by an unexpected medical expense. In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act which made it even more difficult for people to file for bankruptcy. During this same period, the number of under-insured grew from 15.6 million people to 25.2 million (Himmelstein).

    To sum up the catastrophe: as a response to the rising cost of care and a growing number of Americans who cannot afford their medical bills, Congress responded by throwing up more barriers to bankruptcy. It’s not that bankruptcy is a real solution, since it does not address the fundamental economic conditions that pushed individuals to bankruptcy in the first place. The point is that our elected representatives are out of touch and out of time. They have little to offer us but moralizing and useless reforms. The only reasonable response is collective action to create a health care program that reimagines the meaning of care and puts people before profits.

    If you have ever needed medical care but didn’t have insurance, you most likely went to a public hospital or clinic. There are approximately 1,131 public hospitals in the US (Fraze). These institutions, which serve 75% more uninsured patients than their private counterparts, are a vital resource for low-income and uninsured patients. Yet, public hospitals are disappearing. Like public schools, they have been swept up in a wave of privatization: the public sector is being dismantled to create new profit streams for the superrich, most of whom have never been to the local communities from which they are siphoning wealth. If your public hospital seems disorganized and dilapidated, it is easy to assume that it is being mismanaged at the local level. Hospitals have also been caught up in the same global economic changes that are at the root of the rising cost of care and ballooning rates of medical debt.

    Hospital privatization is sweeping the country, and states like New York and Louisiana are leading the way. In early 2013, Governor Cuomo announced a budget that would mark the beginning of the end of publicly-funded hospitals in New York state. He is seeking to close Brooklyn’s Long Island College Hospital and Interfaith Medical Center and replace them with private versions (Frost). The property where the hospital sits is also being eyed by developers as a location for a luxury condominium (Lutz). Shuttering LICH is a significant step that has ramifications far beyond the fate of one institution. It would set a precedent for turning public hospitals over to the private sector, a move that Assemblywoman Joan Millman called “troubling” because private hospitals have a “fiduciary responsibility to their stockholders, not their patients.” In an era when tens of millions of patients are drowning in medical debt and the number of uninsured is on the rise, officials like Cuomo actually believe the solution is to eliminate those few institutions that serve people in need to create a new market for the global investor class.

    There is no better example of a clueless official who seems to reside on a different planet from his constituents than Louisiana’s Governor Bobby Jindal. In 2012, Jindal proposed funding cuts for the state’s health care programs to plug a $165.5 million budget gap. The impact on public hospitals will be disastrous, forcing them to reduce the care they provide to Medicaid patients and to those without insurance. Louisiana State University alone plans to lay off 1,495 hospital employees and cut services at seven hospitals across the state. Some buildings will simply be abandoned and left to rot (Shuler). Jindal is also planning to restructure the state’s health care system, turning several public hospitals over to the private sector. Private firms would receive public dollars to run hospitals whose first order of business is to earn returns for investors. Louisiana State Sen. Francis Thompson openly declared his opposition to the plan. “I’m afraid…we may get picked like a buzzard does a dead animal,” he said (Millhollon).

    Thompson’s description is accurate. The public sector is a carcass being picked to the bone by private sector vultures. Privatization will deepen the debt crisis by forcing hospitals to focus on their credit rating, not patient care. As described below, credit rating agencies are already among the most powerful corporations in the world. Under threat of a reduced rating, hospitals will be under even more pressure to aggressively pursue medical debtors. They will also offer less care to low-income patients because the bond ratings of hospitals can be negatively impacted if hospitals provide too much charitable care. Yes, too much charitable care is a thing that exists in the world of Wall Street finance. When hospitals are privately financed, bond rating agencies determine our future (Zieger).

    Another world is possible. Under a humane health care system, we would begin to ask which measures of success really matter. We would start with the big questions: what does it mean to live a healthy life and how do we get there together? But under Wall Street’s influence, hospitals are analyzed according to financial metrics, such as debt per bed and local market competition. The threat of lower bond ratings forces hospitals to hire Wall Street consultants, to cut back on purchases of medical equipment, to postpone the hiring of medical personnel, and to lay off staff. Indeed, in New York City, an investment banker named Stephen Berger has been recruited to drive the nails into the coffins of community hospitals in order to create more opportunities for Wall Street to make money (Benson). Debt starts a vicious cycle that keeps a hospital from focusing on patients. This is a kind of madness, a nightmare from which we must finally awaken.

    The madness extends beyond the walls of the hospital. Our cities and towns are being sucked dry by Wall Street and by global investors who demand a profit at any cost. In many cases, hospitals are responding to the crisis by aggressively trying to extract money from patients. It starts before patients even leave the hospital. In 2012, the Minnesota Attorney General began an investigation of Accretive Health, one the largest medical debt collection firms in the country. Documents reveal that debt collectors were allowed into hospitals where they were indistinguishable from regular hospital staff. According to the New York Times, such collectors routinely demand [that patients] pay outstanding bills and may discourage them from seeking emergency care at all.” This is a violation of a federal law requiring hospitals to provide care to anyone who needs it. In Minnesota, the mother of a child who needed surgery reported that collectors hounded her for payment before her son received care. She did not know the agents who approached her were debt collectors. “You really feel hoodwinked,” she said. These collection tactics are becoming business-as-usual. A for-profit health care system means health care is a luxury enjoyed by those who can afford it. The rest of us must beg, borrow, and endure harassment to get the services we deserve.

    The debt spiral doesn’t stop with medical debt. Once the bills pile up, studies show that people borrow even more to make ends meet. As described

    in the Debt Resistors’ Operations Manual, people who can’t afford medical care turn to credit cards, the so-called “plastic safety net,” to pay for daily necessities (Zandt). Thus, credit card debt, often assumed to be the result of overspending by impulsive shoppers, is actually inseparable from our for-profit health care system. Insurance companies and investors make a killing by withholding care, then credit card companies clean us out a second time by charging usurious interest rates and adding late fees to our accounts when we cannot pay. A report by the public policy group Demos, “Borrowing to Stay Healthy,” reports that

    Twenty-nine percent of low- and middle-income households with credit card debt reported that medical expenses contributed to their current level of credit card debt.

    Reports like these illustrate the circular logic of the debt spiral. When people can’t pay doctor bills, they often turn to other forms of credit, which compounds the problem. Because health insurance is tied to employment, a serious medical condition can limit a person’s ability to work, earn income, and remain on a health plan. Get sick. Can’t work. Lose health care. Go into debt. Take on more debt. When medical debt leads to consumer debt, it can cause dire consequences. Health Affairs researchers Robert W. Seifert and Mark Rukavina

    People with medical debt are often subject to legal judgments, wage garnishment, attachment of assets including bank accounts, or liens on their homes, which can lead to foreclosure.

    It might be surprising that many medical debtors own their own homes. In fact, people with medical debt and those without have equal rates of home ownership. But there is one important difference: those with medical debt are more likely to use their homes as collateral for loans or take out a second mortgage to pay the bills. There is no better barometer of our time than the fact that owning a home pushes us deeper into the debt trap. The capitalist dream has led us down a dark path. The future has been gambled away. Millions have tapped into retirement funds to pay medical debt (Garcia). The debt spiral—from medical debt to consumer debt to foreclosure and a dwindling retirement account—shatters the myth of personal responsibility. Debt is a rigged system of overlapping and mutually reinforcing types. For many, there is no exit.

    To be in debt is a shameful thing. Most of us have been made to feel like our debts are our fault, even though one in seven adults in the US is currently being pursued by a debt collector and more and more of us are in debt for basic necessities like housing, education, and health care. Medical debt is a source of shame that affects people’s overall health.

    It’s quite simple, really. When people can’t afford to see a doctor, they don’t. Patients who can’t afford to pay—or who have accrued medical debt—are less likely to seek out care because they are ashamed about their debt and don’t want to end up owing more (“Consequences”). This ultimately leads to more health problems and increases the costs of care. A study in the Journal of General Internal Medicine showed that

    Over two-thirds of those who either had a current medical debt or had been referred to a collection agency reported that it caused them to seek alternative sites of care or to delay or avoid seeking subsequent care when needed.

    When Republicans in Congress invented a boogeyman called “death panels” during the 2008 presidential campaign, they weren’t talking about the for-profit health care industry. But they should have been. One report showed that 45% of medical debtors put off necessary care to avoid debt (Garcia). The US health care system is making people sick and keeping them that way because illness is profitable (Jacoby). Is that the kind of health care system we want? Is that the kind of world we want?

    Medical Debt and the Dystopian Nightmare of Credit Scoring

    If you’re wondering why you have a low credit score or why you never seem to qualify for the lowest interest rates on home, car, or other loans, the problem may be medical debt. This is true even if you paid an overdue medical bill. The Federal Reserve has shown that more than half of all collection accounts that negatively impact credit reports are medical debt (Avery). This is a result of the fact that health care costs are on the rise and tens of millions are uninsured. But it is also because medical debt is treated differently from other kinds of debt. Private health insurance reimbursement is incredibly cumbersome. Different benefits are often covered by different companies and at different rates, leading to a lengthy, circuitous billing process that often leaves patients holding the bag. If you have ever received a medical bill that you didn’t understand or that you thought your insurance was supposed to cover, you have been caught up in this Kafkaesque system. If you have ever received a letter from a health care provider stamped with the notice “This Is Not A Bill,” or if you have signed a form at a doctor’s office promising to pay anything your insurance fails to cover, you have been an unwitting victim in the tangled web of medical billing, an industry that thrives on patient and health care provider confusion. According to Rukavina,

    One study found that nearly one-third of respondents let a medical bill go to a collection agency because they did not understand the bill or explanation of benefits statement. Another study estimated 14 million American adults said that a medical bill was sent to a collection agency because of a billing mistake.

    Confusion is the grease that keeps the wheels of the medical collections industry turning. It’s hard not to think that billing “mistakes” may not be mistakes at all but part of an intentional strategy to keep patients in the dark and in the red. In addition to patient confusion, medical debt is more likely to end up in collection because hospitals routinely sell medical debt to debt collectors after 60-90 days of nonpayment, far less than the customary 180 days for other kinds of debt. Health care providers rarely report paid medical bills to the credit reporting agencies. So, even if you are billed in error, your health care provider may send your bill to a collection agency before you can dispute the charge (Bernard). Once in default, a medical debt stays on a credit report for up to 7 years, even if you pay the bill. Research by the Commonwealth Fund shows that, in 2010, 9.2 million people wound up in default on a medical bill because of a billing mistake (“Help”).

    These mistakes have serious consequences. According to evidence obtained by the Access Project, a single paid medical bill can lower a consumer credit score by as many as 80 points. That means you will pay a higher interest rate for almost anything else you want to buy on credit, including a home or a car. The fact that a relatively small medical bill can end up costing thousands in interest charges down the line demonstrates the obscene power of the credit rating agencies. Consumer protection attorney Robert Nahoum told Strike Debt:

    I’ve never seen three companies with more power over the American consumer than the top three credit reporting agencies, Equifax, TransUnion, and Experian. There’s very little consumers can do.

    If patients are powerless, so are many health care providers. It’s important to note that your doctor may be just as confused as you are. Strike Debt has talked to health care workers around the country, and they tell us that they are as frustrated as patients when it comes to medical billing. Why do insurance companies and ratings agencies have so much power over our lives? Why do we live in such perpetual confusion? These questions are important to ask when we think of what it means to be healthy and what kind of economy we need to sustain life.

    We might also ask why our elected officials don’t put a stop to predatory medical billing and curb the power of the ratings agencies. The Medical Debt Relief Act attempts to prohibit credit reporting agencies from listing medical debts on credit scores. Yet, even this minor reform has little chance of passing because the credit rating agencies and insurance companies are a powerful lobby in Washington. And even if the MDRA were to make it through the Senate, it only applies to paid medical bills. As usual, Congress lacks the political will to challenge the power structure that puts people in debt and keeps them that way. Debt is a tool of capitalist exploitation, and we can’t eliminate the debt without rethinking the larger economic system.

    Indeed, the evidence actually indicates that if we don’t act things will get worse for patients and debtors before they get better. FICO has begun developing

    a special ratings system to rank potential patients on how likely they are to pay their medical bills (Gipson). Like having a bar code tattooed on your forehead, we could be looking at a brave new world in which your credit rating determines not only whether you can obtain a credit card but whether you receive medical care when you get sick.

    No one disputes that our health care system is for profit. But whose profit? Patients are certainly losing the health care battle. “There’s a tendency to attribute [the high cost of care] to minorities or those with severe health problems,” Matthias Rumpf of the Organization for Economic Co-operation and Development has explained. Actually, the evidence shows that

    Even Americans with health insurance and those who have the highest education and income levels fall behind their counterparts in other parts of the world (McHaney).

    It is clear that insurance companies, global investors, and credit ratings agencies are reaping a massive windfall. Profiteers are descending on the health care industry from all corners of the finance world. One of the largest and most profitable health care providers, HCA, runs 163 hospitals across the country. The company is also under investigation by the Justice Department for defrauding Medicare by performing unnecessary heart surgeries on unwitting patients (Koleva). And, this year, HCA was ordered to pay a $162 million fine for failing to make agreed-upon repairs to run-down hospitals in Missouri as well as for reneging on a promise to provide charity care to low-income patients.

    Who is profiting from this criminal activity? HCA, which was founded by former Senate majority leader Bill Frist’s family, is primarily owned by Bain Capital, the private equity firm founded by Mitt Romney. Bain investors are not turned off in the least by how HCA treats patients. In fact, according to the New York Times,

    The financial performance has been so impressive that HCA has become a model for the industry. Its success inspired 35 buyouts of hospitals or chains of facilities in the last two and a half years by private equity firms eager to repeat that windfall (Creswell and Abelson).

    In a private health care system, nothing—not fraud or patient abuse or crumbling buildings—interferes with the relentless drive for corporate profit. In fact, the same private equity firms that control many hospitals also have a stake in debt collections companies. This means that companies like Bain Capital that own the hospital networks that put us into debt also invest in many of the firms that try to collect that debt from us. Once the web is spun, there’s no way the 1% can lose. Most of us are focused on daily life: trying to earn enough to put food on the table and care for the people we love. We lay awake at night worrying about a sick child and pray our insurance policies will protect us if tragedy strikes. Wall Street knows that few people have the luxury of paying attention to what’s really going on in their boardrooms. That is why it is more important than ever to change the conversation about medical debt and our for-profit health care system.

    Won’t Obama’s Affordable Care Act Reduce Medical Debt?

    The fact that many liberals greeted the passage of the Obama administration’s health reform law with such delight is downright shocking when we consider its glaring inadequacies. In 2014, states will be required to create exchanges in which people can purchase private insurance. But, as PNHP physician Margaret Flowers has explained, the majority of these plans will not offer full coverage. And people who purchase insurance through an exchange will end up with plans that cover 70% or less of the cost of health care. Since even a short hospital stay can cost tens of thousands of dollars, the math is not on the side of people who don’t already have huge bank accounts. Insurance companies profit by denying coverage. Now, thanks to the Affordable Care Act, that strategy will be codified into law. Insurance companies will also gain access to a whole new market for their products while offering worthless umbrellas in return.

    It gets worse. The federal subsidy that is supposed to help people purchase health insurance under the new law only applies to individuals, not families. So, depending on your income level, if you want to purchase coverage through an exchange, you’ll be left with two options: pay market rate for private insurance or go without. The people who will benefit from an expansion of our market-based insurance system are not patients. Instead, the 1%, who already control the profit-driven health care system, will get a payout every time the rest of us see a doctor. Most appalling, however, is that more than 20 million people will not be covered under the new law (Babcock).

    It makes no sense to expand a failed market and demand that people participate in it, especially when we already have evidence that such reforms don’t work. In Massachusetts, for example, health care reform did not stem the tide of bankruptcies linked to medical debt (Himmelstein, “Medical”). There is simply little evidence that the ACA will do much beyond worsening an already grave labor crisis. Reports are emerging that employers, especially colleges and universities, are planning to cut employees’ hours in order to avoid offering health benefits under the ACA (Zorn).

    Considering what we know, the fact that many treated the passage of the ACA as a progressive victory seems like magical thinking. As Flowers noted, public relations and marketing expenses account for more than one-third of the cost of care. Even the deficit-crazed political establishment seems to be suffering from willful blindness. According to the Washington Post, if we had the per-person health costs of France or Germany, two countries with publically-funded health care, “America’s deficits would vanish” (Klein). It’s time to follow the money and it’s time to get real. According to research conducted by Physicians for a National Health Program, a single-payer system could save $400 billion per year. Yet politicians focused on deficit reduction would scoff at the suggestion that we publicly fund health care in America.

    For-profit health care kills. In 2007, in Prince George’s County, Maryland, a twelve-year-old boy named Deamonte Driver died from a toothache. He had an infection, but his mother could not afford to take him to a dentist (Otto). Deamonte lost his life because he did not receive antibiotics that would have cost $80. This is the world we live in today. What kind of world do we want? Universal, single-payer medical care would be a short-term step in the right direction. But it’s not the ultimate solution. State-financed care would give us, above all, a chance to take a step back from the relentless bills and the anxiety that comes from not knowing if we’ll be able to afford to care for ourselves and our loved ones. It would give us a chance to ask if there are really only two choices: private or public, corporate or federal. It would give us, at long last, what we really need: the freedom to ask larger questions about the meaning of health and how we can work together to provide it to ourselves, to our families, and to those who come after us. We have a difficult road ahead. But there is no doubt that the private insurance industry is wholly inadequate to the task. Our lives are in jeopardy because medical care in the US is a profit-making enterprise that enriches the few at the expense of the rest of us. Reform won’t do in the long run. Politicians do not have the will to take the necessary steps. As Dr. Steffie Woolhandler of PNHP makes clear,

    It’s not your fault if you’re in debt and it’s particularly not your fault if you’re in debt because of a medical problem. This is unfair. No other developed nation forces people to go into debt because they get sick (“Time To End”).

    The situation we face is not our fault, but it’s our job to take a stand together. The only real solution is a bottom-up, grassroots movement that puts people before profits. It will not be given to us by benefactors or by politicians who depend on Wall Street funding for reelection. It’s up to us. The time is now. It’s life or debt.

    Avery, R. et al, An Overview of Consumer Data and Credit Reporting, Federal Reserve Bulletin, Summer 2003 Babcock, Charles R. “Uninsured Americans Get Hit With Biggest Hospital Bills.” Bloomberg News. 11 March 2013.

    Benson, Barbara, “NY to Address Troubled Brooklyn Hospitals.” Crain’s. 28 June 2011. Bernard, Tara Siegel, “Discrepancies on Medical Bills Can Leave a Credit Stain.” New York Times. 4 May 2012.

    “The Consequences of Medical Debt: Evidence from Three Communities.” The Access Project, Feb. 2003.

    Creswell, Julie and Reed Abelson. “A Giant Hospital Chain is Blazing a Profit Trail.” New York Times. 14 Aug 2012.

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    10 Statistics about US Medical Debt that Will Shock You

    Bankruptcy medical debtMedical debt is a big problem in the United States. For years, it’s been the No. 1 reason people file for bankruptcy — even though the more common assumption is that those struggling financially have been overspending in other areas of their life.

    Luckily, bankruptcy can be a helpful solution for a lot of people. It’s not easy to get out of debt alone, but filing for Chapter 7 bankruptcy allows a person to keep most of their property AND rid themselves of medical debt and other types of unsecured debt, like credit card bills and personal loans. As we’ll discuss below, many Americans don’t have the cash to take on all of their medical bills, so they’ll rack up credit card spending or visit a payday lender after blowing through their savings. Bankruptcy puts an end to all this. Plus, those annoying creditors will stop calling.

    If you’ve ever thought you knew a lot about why people file for bankruptcy, think again. These 10 facts about U.S. medical debt may come as a surprise.

    1. Per capita, the U.S. spends more per person on health care than any other country.

    The United States spends more than $9,000 per person on health care. While this might initially sound like a good thing, it’s not — despite its high spending, our country doesn’t have the best health outcomes. For instance, the U.S. ranks 12th in life expectancy among the 12 wealthiest industrialized countries.

    Nearly one in 10 adults reported delaying or not receiving medical care due to cost in 2015. However, the rates of cost-related access barriers were lower than in any other year during the period of 1998 to 2015 for low-income people as well as those classified in worse health. Dental care, prescription drugs, and eyeglasses are the first things people give up because of health costs.

    3. A $500 unexpected medical bill is too much to pay for many people.

    According to a Kaiser Health Tracking Poll in 2017, 45% of Americans said they’d have a difficult time paying an unexpected $500 medical bill. About 19% wouldn’t be able to pay it at all, while 20% would put it on a credit card and pay it over time. Others said they’d need to borrow money from a friend, a family member, a bank, or a payday lender.

    4. Meanwhile, 1 in 5 working-age Americans with health insurance have trouble paying off their medical bills.

    According to a Kaiser Family Foundation and New York Times survey conducted in 2016, 20% of Americans with health insurance found that when trying to pay off their medical bills, they had serious financial challenges and even changes in employment and lifestyle. For those uninsured, the number rose to 53%. Although it’s clear insurance helped in terms of people’s ability to make payments, about the same amount of people — insured and uninsured alike — still said their medical bills had a huge effect on their families.

    5. More than 60% of insured Americans with medical bills blow through most or all of their savings.

    From that same survey, people with health insurance still make sacrifices to pay their medical bills, including going through their savings. Many also take on an extra job or work more hours (42% of respondents) or borrow money from family or friends (37%). Eleven percent seek the aid of a charity.

    6. Another near 60% of people who have problems paying their medical bills have been contacted by a collection agency in the past year.

    This goes for both people with and without health insurance, according to the Kaiser/New York Times survey. Fifty-five percent of people with insurance and medical bill problems say they are just getting by or don’t have enough to make ends meet. About one-third of all those with medical bills were unable to pay for basic necessities like food, heat, or housing.

    7. The good news: Nearly 13 million fewer people have medical bill problems today than they did 5 years ago.

    According to the National Center for Health Statistics, the percentage of persons under age 65 who were in families having problems paying medical bills over a 12-month period decreased from 21.3% (56.5 million) in 2011 to 16.2% (43.8 million) in the first 6 months of 2016. Of all families with persons under age 65 in 2016, here’s the breakdown of those who had trouble paying their medical bills: 28.5% were uninsured, 21.1% had public coverage, and 12.6% had private coverage.

    8. However, 7% of adults struggling with medical bills over the past two years have declared bankruptcy.

    A 2015 poll done by NPR, Robert Wood Johnson Foundation, and the Harvard T.H. Chan School of Public Health found that 7% of respondents declared bankruptcy due to their health care costs over the previous two-year period. Other ways medical bills affected families? Nearly 20% reported taking out a loan that would be difficult to pay back, while 23% piled on credit card debt.

    9. Some bankruptcy attorneys have noticed fewer medical bankruptcies since the Affordable Care Act (ACA) rollout.

    While the controversial Affordable Care Act has certainly helped some people (20 million became insured through it), it’s unclear how much of an effect the universal health care law has had on bankruptcies. People aren’t required to declare why they’re filing bankruptcy, though we know many do so because of medical debt.

    We polled some of our member attorneys on if the repeal of Obamacare would increase medical bankruptcies. Here are the results:

    • 58% felt an Obamacare repeal would increase medical bankruptcies
    • 34% thought it would have no impact
    • 8% thought it would increase medical bankruptcies

    10. Despite ACA, health insurance has become less affordable since 2015.

    More people with health insurance have had a difficult time affording their health care since 2015. For premiums in 2017, 37% now find it difficult to pay versus 27% just two years ago. Meanwhile, 43% are having a hard time paying their deductibles in 2017 while just 34% were struggling in 2015. And finally, copays and prescription drugs seriously affected 31% of people in 2017 versus 24% in 2015.

    Put an end to medical debt now: Get help from an experienced bankruptcy attorney

    Here at the forum, we have dozens of member attorneys in all 50 states who are ready to help you get back on your feet after dealing with costly medical bills. Bankruptcy isn’t for everybody, but it could be right for you. Contact us for a free debt evaluation today at 877-280-4299.


    bankruptcy medical debt

    Arthur Ray Law Offices is your Bankruptcy Lawyer Memphis, TN that will prepare your bankruptcy petition for free. As a bankruptcy lawyer Memphis, I can help you with Chapter 7 bankruptcy questions and Chapter 13 bankruptcy questions

    At no charge to you, I will thoroughly discuss your financial situation, including non-bankruptcy options. I will help you with a plan to end your financial problems. You will find the solution to be easier than you thought. If you find bankruptcy to be best option, we will go over how to claim bankruptcy. Our Memphis bankruptcy attorneys will prepare your bankruptcy for free and will file it only when you are absolutely confident that it is best for you.

    When you come into our office, we will offer you some popcorn and a cold drink to discuss your business or personal bankruptcy. As your bankruptcy attorney Memphis, TN, we want to make your experience as pleasant as possible.

    • We offer reasonable bankruptcy fees.
    • We offer a payment plan on Chapter 7 bankruptcies (straight).
    • $0.00 dollars up front attorney’s fee on Chapter 13 bankruptcies.**
    • Most of the time we can get your repossessed car back.*
    • Filing a bankruptcy in Memphis will stop foreclosures, garnishments, lawsuits.*
    • You can protect co-signers from harassment and a lawsuit.*
    • Stop bill collector harassment and tax debt seizures.*
    • Keep your property.*
    • Reduce and consolidate your payments.*

    Arthur Ray Law Offices

    We are a debt relief agency. Our Bankruptcy Lawyers in Memphis, TN help people file for bankruptcy under the bankruptcy code.

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