Quote:In total, 56 million people struggle to pay health care related costs each year. That's more than one out of four people who were in families that were burdened by medical bills. Most of these were paying the bills as they could, over time. However, 16.5% were in families that had problems paying those bills in the past year. Another 8.9% just couldn’t pay them at all. To pay the bills, fifteen million used up their life savings.

Ten million skimped on groceries or defaulted on rent to pay medical bills. Twenty-five million cut back on taking their prescription medications. That leads to further health problems down the road. 

High health costs force 11 million people to rack up high-interest credit card debt to pay for health care. As a result, medical costs cause 62% of the two million personal bankruptcies declared each year. That is more than those going bankrupt for unpaid credit card debt or mortgage defaults. 

These families were not the poor, who are usually well-covered by Medicaid. Instead, two-thirds were homeowners and three-fifths were college graduates. They were middle-class Americans who got hit with massive, and unexpected, out-of-pocket medical expenses. Those with private insurance saw an average of $17,749 per family. Those who lost insurance during the process faced $22,658 in bills. Those without insurance obviously were hit with the most, at $26,971 per family.

A frightening 90 percent of those who had homes had to take out a second mortgage. Nearly 30 percent maxed out their credit cards, while 8 percent were forced into bankruptcy because the illness cost them their jobs.

Even more disturbing was that 78% of them HAD health insurance that failed to cover all their bills.

Most of them (60%) were let down by private insurance, not Medicare or Medicaid. Ten million of them will incur medical costs they can't pay off each year, thanks to high-deductible plans.  (Source: CNBC, Medical Bills Biggest Cause of Bankruptcy, June 19, 2013)

How did those with insurance wind up with so many bills? After high deductibles, co-insurance payments, and annual/lifetime limits, the insurance ran out. Other companies denied claims or just canceled the insurance.

The most expensive diseases were diabetes, at $26,971 per family, and neurological disorders like multiple sclerosis, which cost $34,167 on average. The biggest expense was hospitalization, which caused half of the bankruptcies. For more see Rising Healthcare Costs.

Quote:The Affordable Care Act was among the likely factors that assisted with a big decrease — nearly 50% — in personal bankruptcy filings in the last six years, according to a Consumer Reports analysis. Other factors, including new bankruptcy laws, a rebounding economy and tighter credit requirements, also likely helped with the reduction, with filings dropping from 1.54 million in 2010 to 770,846 last year.



Medical bills, which are famously costly and unpredictable, have been historically estimated as the leading cause of bankruptcy filings. Other reasons include a lost job, reduced income and divorce, Gaudreau said. A 2009 Harvard study estimated medical issues were responsible for 62% of bankruptcies, while a 2013 NerdWallet analysis based on the Harvard study came to a more conservative conclusion, or 57%. (Another study, done at Northeastern University, found a far lower rate, or 18% to 25%.) The problem with looking at medical bankruptcy specifically is the same as deducing the cause of personal bankruptcy more generally: there isn’t always one reason. The NerdWallet analysis, for example, didn’t include indirect reasons for medical bankruptcy like lost work.

Quote:I was in total shock, strapped to a gurney in the back of an ambulance. I had been repeatedly abducted, beaten, and sexually assaulted by a transient man over a period of a year. Completely defenseless and traumatized, I was later groped by a series of predatory homeless men. Defeated, my extreme circumstanceselicited an extreme response: I began lying naked on a patch of grass near a busy street in Salt Lake City. Bystanders called 911. Police and ambulances arrived, and before they touched me the paramedics politely asked me if they could take my vital signs.

However, no one ever warned me about the financial duress that I would face when I emerged from my nervous breakdown on the streets. That burden translated into nearly $4,000 for three ambulance rides between April 2016 and March 2017. These debts wrought havoc on my credit and hampered my recovery from homelessness. The interest on my uncollected debts damaged my credit score. As a result, stores like Best Buy rejected my attempts to buy a laptop on credit, which would have let me pursue my vocation as a journalist once again. This pulled me further into the catch-22 of credit in America: How can you improve it without already having good credit?

After all, credit is used to gauge everything from job eligibility to rental applications. An estimated 43 million people have unpaid medical debt on their credit reports, and 52 percent of all debt on credit reports relates to medical expenses, according to a 2014 study by the Consumer Financial Protection Bureau. My story is unusual only because I managed to extricate myself from homelessness, as well as the financial shackles that constrained me during those two long years.   MEDICAL DEBT IS A leading cause of bankruptcy and an increasingly common cause of homelessness. A 2017 survey by Addictions.com found that the top reason for homelessness in South Florida was medical debt.