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Most of Us are One Serious Illness Away from Bankruptcy

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It does not take much to push a middle class family into bankruptcy.  One serious illness will drive up medical expenses or put a breadwinner out of work.  Most of my clients are not only facing debilitating medical issues, but also financial disaster.  One of the main reasons for this is the current system in which this country pays for healthcare.

Despite a low unemployment rate, Georgia remains among the top three states in the nation for personal bankruptcy filings.  While, statewide and nationally, bankruptcy filing numbers are dropping, Georgians still file for bankruptcy at two times the national average.   The monthly filing rate in Georgia is 4.43 per 1000 people.

Last year, a study published in the American Journal of Public Health  showed that medical problems contributed to over 60% of bankruptcy filings.  Medical bills account for over half of all unpaid invoices sent to collections each year.  Even with the passage of the Affordable Care Act (ACA), 530,000 families suffer bankruptcies each year that are linked to illness and escalating medical bills.  Medical bills contributed to 58.5% of bankruptcies; illness related income loss contributed to 44.3% of bankruptcies.  Many debtors cited both issues as the reason for filing.

For those without health insurance, any medical issue leads to a quick financial disaster.  According to the 2018 US Census, Georgia has the third highest rate of those living without health insurance.  For those with health insurance, middle-class Americans face increasing co-payments and deductibles in recent years despite the passage of the ACA.    Most families do not have enough savings for a simple emergency.  A recent study found that only 40% of Americans have enough saved to cover a $1000 emergency.  Over three quarters of full time workers are living paycheck to paycheck.

The current health system offers little protection.  Loopholes, co-payments and high deductibles can quickly spiral into financial disaster.  Also, even the best health insurance disappears when a prolonged illness leads to a job loss. Bankruptcy debtors prove the misfortune comes from the way we continue to pay for health care.   One out of every 6 Americans has an unpaid medical bill on a credit card amounting to $81 billion in debt nationwide.  One in 12 Americans went without medical insurance last year.  Even those that have medical insurance are not insulated from facing massive debt due to medical bills.

Meanwhile, The Trump administration plans to cut Medicaid expenditures; gut protections for those with pre-existing conditions; and allow states to offer cheaper plans that could exacerbate the under-insured situation.    In October, Governor Kemp’s administration in Georgia requested a waiver from the ACA requirements that would allow cheaper health insurance plans to be offered on the healthcare exchange.  While the plans are cheaper, they also cover less medical expenditures and do not offer the same consumer protections required under the ACA.

Congress currently has a Medicare for All Act (H.R. 1384) that would transform the US health care system, making health care a human right.  This would, among other things, establish a long-term national healthcare program.  The plan covers everyone residing in the US.  It covers primary and preventive care, mental health care, reproductive care, vision and dental care and prescription drugs.  It also provides home and community based long-term care and support.  The plan provides full choice for any participating doctor or hospital.  There would be no premiums, deductibles or co-payments for medical services.  The bill has a four year transition plan.

And that kind of sums up where we are in this country.  We are all rolling the dice on our healthcare and betting that we won’t end up in the poorhouse.  Or we are going to transform healthcare.  It’s one or the other.