What’s the Most Common Cause of Bankruptcy?

In an amazing article by the NCHC (National Coalition of Health Care), it was reported that “50% of all bankruptcy filings were partly the result of medical expenses.”  In another report, a Harvard study found that this number actually attributed 62.1% of bankruptcies to health care costs.  This is a startling amount when there is so much bad news about the economy, layoffs, and foreclosures.  Sadly, but the time you finish reading this post, approximately 4 people will have filed for bankruptcy due to a serious health problem assuming you took 2 minutes to read this (every 30 seconds)!

It is no secret that the US spends more on health care than any other country in the world.  Many people might not know though that the average lifespan of Americans (a common indicator of a country’s health) is no where near the top, but #24 according to the World Health Organization (WHO)at about 70 years old.  Ironically, the NCHC mentions that increased spending in healthcare ultimately leads to longer life spans of its people.  When the WHO analyzed a country’s health based off of the amount each country spent versus the actual health of the country, the US ranked even lower at #37!

There is no question that based off of the numbers, something just is not right with our healthcare system.  President Obama was recently quoted at this year’s AMA annual meeting that “It (our healthcare system) is a model that rewards the quantity of care rather than the quality of care.”  There is not the fault of doctors though who are ruled by health insurance companies.  Sadly, of all of the health related bankruptcies found in the Harvard study, 78% of them already had insurance!  They were taken down by the extra costs including co-pays, deductibles, and uncovered services. 

As President Obama moves forward with national health care reform, we will see if our privatized health care system transits itself to a government operated one.  Maybe it will even be a hybrid of it.  Hopefully whatever the outcome is, chiropractic and acupuncture will be included in the reform.  Both modalities have been shown that patients who get regular care by chiropractors or Chinese and oriental medicine doctors, spend less time in hospitals, take less medicine, and require fewer surgeries.  The overall health cost for these individuals is also lower as well, even when not covered by health insurance.  Ultimately this could translate to better health physically, mentally, and financially.

More interesting health care cost facts from the NCHC include:

• In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.
• Health care spending is 4.3 times the amount spent on national defense.
• In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.
• Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.
• Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.
• Premiums for employer-based health insurance rose by 5.0 percent in 2008. In 2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers, experienced an increase of 6.8 percent.
• The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. Workers contributed nearly $3,400, or 12 percent more than they did in 2007. The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712).
• Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999.
• Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period.
• Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by the end of 2008.
• According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 1999.
• The average employee contribution to company-provided health insurance has increased more than 120 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.
• The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3 percent in 1996 to 43.1 percent in 2003 – a 16 percent increase.
• National surveys show that the primary reason people are uninsured is the high cost of health insurance coverage.
• Economists have found that rising health care costs correlate to drops in health insurance coverage.
• A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses. Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
• A new survey shows that more than 25 percent said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.
• About 1.5 million families lose their homes to foreclosure every year due to unaffordable medical costs.
• A survey of Iowa consumers found that in order to cope with rising health insurance costs, 86 percent said they had cut back on how much they could save, and 44 percent said that they have cut back on food and heating expenses.
• Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage. Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.
• According to a recent report, the United States has $480 billion in excess spending each year in comparison to Western European nations that have universal health insurance coverage. The costs are mainly associated with excess administrative costs and poorer quality of care.
• The United States spends six times more per capita on the administration of the health care system than its peer Western European nations.