Most bankruptcies attributed to medical expenses

07.15.09
By Lewis Green

Many families feel that bankruptcy can't happen to them, that they are smart enough with their money to maintain a comfortable lifestyle. But as a recent study points out, an unexpected medical emergency can send anyone into a downward spiral - forcing them to try to stop foreclosure and other problems associated with bankruptcy.

A study which is published in the August issue of the American Journal of Medicine found that more than 60 percent of bankruptcies filed in 2007 were caused in part by a medical issue.

Although this study was done before the recent economic downturn, the study finds that even before the financial implosion, medical costs were driving up the rates of bankruptcy.

The report found that between 2001 and 2007, the amount of bankruptcies which were attributed to medical bills or other medical-related issues increased by 50 percent.

Dr James E. Dalen of the University of Arizona college of medicine in Tucson and one of the study's authors, says that the results show that there is a problem with the nation's health care.

"This study provides further evidence that the US health care system is broken," he said. "Medical bankruptcy is almost a unique American phenomenon, which does not occur in countries that have national health insurance. These long-time advocates of a single payer system give us another compelling reason to work toward this goal as a nation."

While some may believe that these medical bankruptcies are limited to the poor or those without insurance, the study found that many middle-class people with insurance fell victim to bankruptcy because of an unexpected medical situation.

Even if Americans are able to stay out of bankruptcy after a medical emergency, they may be forced into credit card debt as reports have shown that an increasing number of people are using their credit cards to charge medical expenses.

According to figures from McKinsey Consulting, Americans are expected to charge $150 million worth of medical costs on their credit card in 2015.

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About 60 percent of all bankruptcies are related to medical expenses according to a new study