Study: Half of US Bankruptcies Because of High Medical Costs

February 2, 2005 ( - A new study has concluded that half of US bankruptcies are caused by medical bills and that a majority of those who fall into debt due to illness are middle-class workers with health insurance.

The study – Illness And Injury As Contributors To Bankruptcy – was published in the journal Health Affairs, and was led by Harvard Medical School’s Dr. David Himmelstein. After a review of bankruptcies in California, Illinois, Pennsylvania, Tennessee, and Texas, researchers extrapolated their findings and concluded that between 1.9 million and 2.2 million people experienced bankruptcy due to medical bills in 2001. This number includes all members of a family that filed for bankruptcy, not the individual bankruptcy filers.

Twenty-eight percent of bankruptcies occurred because of illness or injury, while 7.7% were due to a birth in the family. Nearly the same number declared bankruptcy due to a death in the family, while 2.5% cited a drug or alcohol addiction.

The study also concluded that of those who file for bankruptcy due to medical bills , 75.7% have insurance at the onset of an illness. The out-of-pocket costs on average since the start of an illness were $11,854.

In the study, the researchers found that the average bankrupt person surveyed had spent over $13,000 on co-payments, deductibles and uncovered services if they had private insurance. People with no insurance spent almost $11,000 on average for such services.

“Our study is frightening. Unless you’re Bill Gates you’re just one serious illness away from bankruptcy,” said Himmelstein, according to Reuters. “Most of the medically bankrupt were average Americans who happened to get sick. Health insurance offered little protection.”

The full study is available here .