Medical Bankruptcy

  VI. Key Issues: Financing and Delivery >> C.  Health Financing >> Private Health Revenues >> Medical Bankruptcy

• Dranove, David, and Michael L. Millenson. Medical Bankruptcy: Myth versus Fact. Health Affairs Web Exclusive, 25 (February 28, 2006): w74-w83. [Abstract] Finds that 17% of the sample had medical expenditure bankruptcies.

• Fay, S., E. Hurst and M. White, The Household Bankruptcy Decision, American Economic Review 92, no. 3 (2002):706–718.

• Federal Reserve Bank. An Overview of Consumer Data and Credit Reporting. Table 10 shows less than 20 percent of court judgments and lawsuits related to debts entail medical creditors (imperfectly measured). Table 11 shows that 52 percent of collections by collection agencies entail medical debt. The mean amount originally owed on medical bills was $386; the median amount was $142. [Full Text (pdf)]
• Furchtgott-Roth, Diana. The Healthcare Bankruptcy Myth. RealClearMarkets. July 30, 2009. This provides a methodological critique of the Himmelstein et al. study.
• Himmelstein, David U., Deborah Thorne, Elizabeth Warren, and Steffie Woolhandler. Medical Bankruptcy in the United States, 2007: Results of a National Study. American Journal of Medicine (2009) [Full Text (pdf)]
• Himmelstein, David U., Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler. Illness and Injury as Contributors to Bankruptcy. Health Affairs Web Exclusive (2005). [Full Text (pdf)]
• Konrad, Walecia. Protecting Your Credit Score From the Medical Bill Maze. New York Times (2010).
• Levy, H. The Economic Consequences of Being Uninsured. ERIU Working Paper no. 12 (Ann Arbor, MI: University of Michigan, 2002).
• Liebman, Daniel. Where we stand (divided) on medical bankruptcy. The Incidental Economist (2014).
• Mahoney, Neal.  Bankruptcy as Implicit Health Insurance. Working paper no. 18105, National Bureau of Economic Research, Cambridge, MA, May 2012. This paper examines the implicit health insurance households receive from the ability to declare bankruptcy. Exploiting cross-state and within-state variation in asset exemption law, I show that uninsured households with greater seizable assets make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth-at-risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are similar on average to the penalties under the Affordable Care Act (ACA).
• Mathur, Aparna and Tom Miller. Clarifying the Research on Medical Bankruptcy (2011). This annotated response to Rep. Kildee critiques the Himmelstein et al. studies of medical bankruptcy and documents their limitations.
• Ramsey, Scott, David Blough, Anne Kirchhoff, Karma Kreizenbeck, Catherine Fedorenko, Kyle Snell, Polly Newcomb, William Hollingworth, and Karen Overstreet. Washington State Cancer Patients Found To Be At Greater Risk For Bankruptcy Than People Without A Cancer Diagnosis. Health Affairs June 2013 32:61143-1152; published ahead of print May 15, 2013, doi:10.1377/hlthaff.2012.1263. We found that cancer patients were 2.65 times more likely to go bankrupt than people without cancer. Younger cancer patients had 2–5 times higher rates of bankruptcy than cancer patients age sixty-five or older, which indicates that Medicare and Social Security may mitigate bankruptcy risk for the older group.
• Skinner, Brett and Mark Rovere. Health Insurance and Bankruptcy Rates in Canada and the United States. Fraser Institute. July 2009. [Full Text (pdf)]  Key findings:
  • The most recent data (2006 and 2007) shows that personal bankruptcy rates are actually higher in Canada (.30% for both years) than in the United States (.20% and .27%).
  • Medical spending was only one of several contributing factors in 17 percent of US bankruptcies; medical debts accounted for only 12 to 13 percent of the total debts among American bankruptcy filers who cited medical debt as one of their reasons for bankruptcy.
  • Medical reasons were cited as the primary cause of bankruptcy by approximately 15 percent of bankrupt Canadian seniors (55 years of age and older).
• Warren, Elizabeth. Medical Bankruptcy: Middle Class Families at Risk. Testimony before House Judiciary Committee (2007). This extensively annotated testimony cites a number of studies of medical bankruptcy.

• Zywicki, T.J. An Economic Analysis of the Consumer Bankruptcy Crisis, Norwest University Law Review 99, no. 4 (2005):1463-1542.