As of Monday morning, you can now sign up for government subsidized healthcare through the Health Insurance Exchanges. Whether you love or hate the law, it is certain to help many previously uninsured people obtain health care. So how does this relate to bankruptcy?
Well, medical bills are one of the main reasons why individuals need to file bankruptcy. Whether it is from a serious illness such as cancer, an accident, or even a routine illness, healthcare is expensive. For those who don’t have insurance, the bills simply continue to pile up with no end in sight.
The group Physicians for a National Health Program conducted a study following the passage of Romneycare in Massachusetts and found that roughly 52% of consumers who filed for bankruptcy listed medical debts as a factor. Prior to the imposition of Romenycare, that number was at 59%.
Furthermore,a study on the website nerdwallet found the following:
- 56 Million Americans under age 65 will at some point have trouble paying medical bills.
- Over 35,000,000 American adults will be contacted by collection agencies for unpaid medical bills.
- Nearly 17,000,000 American Adults will receive a lower credit score due to their medical bills.
- Over 15,000,000 American Adults will use all their savings to pay medical bills.
- Over 11,000,000 American Adults will incur credit card debt to pay medical bills.
- Roughly 10,000,000 American Adults will be unable to pay for basic necessities like rent, food, and utilities due to their medical bills.
- Over 16,000,000 children live in households struggling with medical bills.
Obviously these numbers are staggering, but will Obamacare change them? Will Obamacare mean less bankruptcy filings? I don’t know, I certainly hope so, but simply having insurance will not solve the problem. Whether or not this will change anything has a great deal to do with deductibles. I have represented hundreds of people with major medical debt in bankruptcy, and most of them actually have insurance.
The problem is that when you have a high deductible, say $10,000, you would first have to come up with $10,000 before you feel any relief from your insurer. For most of my bankruptcy clients, a high deductible leaves them in the same position as they would be if they never had health insurance to begin with. It is too early to tell much about the success of this program, and perhaps the deductibles will be affordable for most families, but if not then Obamacare may not provide much if any relief.