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Posted: February 08, 2005

Stunning Reality on Medical Bills

Half of all U.S. bankruptcies are caused by soaring medical bills, and most people sent into debt by illness are middle-class workers with health insurance, researchers said last week.

The study, published in the journal Health Affairs, estimated that medical bankruptcies affect about 2 million Americans every year, if both debtors and their dependents, including about 700,000 children, are counted.

"Our study is frightening. Unless you're rich and famous, you're just one serious illness away from bankruptcy," said Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School, who led the study.

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"Most of the medically bankrupt were average Americans who happened to get sick. Health insurance offered little protection."

The researchers got the permission of bankruptcy judges in California, Illinois, Pennsylvania, Tennessee and Texas to survey 931 people who filed for bankruptcy.

"About half cited medical causes, which indicates that 1.9 million to 2.2 million Americans experienced medical bankruptcy," they said.

"Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7% had insurance at the onset of illness."

Researchers indicated that less than 1% of all bankruptcy filings were due to credit card debt, a common misconception.

Dr. Steffie Woolhandler, a Harvard associate professor and physician who advocates for universal health coverage, said the study supported demands for health reform.

"Covering the uninsured isn't enough. We must also upgrade and guarantee continuous coverage for those who have insurance," Woolhandler said in a statement.

She said many employers and politicians were pressing for what she called "stripped-down plans so riddled with co-payments, deductibles and exclusions that serious illness leads straight to bankruptcy."

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