Despite having health insurance, many bankrupt families were overwhelmed by their medical debts, the team at Harvard Law School, Harvard Medical School and Ohio University reported in the American Journal of Medicine. The researchers, funded by the Robert Wood Johnson Foundation, said the share of bankruptcies that could be blamed on medical problems rose by 50 percent from 2001 to 2007.

The researchers studied 2,134 random families who filed for bankruptcy between January and April in 2007, before the current recession began. They used public bankruptcy court records and surveyed 1,032 people by telephone. While only 29 per cent directly blamed medical bills for their bankruptcy, 62 per cent had medical bills that totaled more than 10 per cent of family income, said an illness was responsible, had lost income due to illness or some other medical factor.

“Using a conservative definition, 62.1 percent of all bankruptcies in 2007 were medical; 92 percent of these medical debtors had medical debts over $5,000, or 10 percent of pretax family income,” the researchers wrote.

More than three-quarters (77.9 percent) were insured at the start of the bankrupting illness, including 60.3 percent who had private coverage. Most of the medically bankrupt were solidly middle class before financial disaster hit. Two-thirds were homeowners and three-fifths had gone to college. In many cases, high medical bills coincided with a loss of income as illness forced breadwinners to lose time from work. Often illness led to job loss, and with it the loss of health insurance.

“Among common diagnoses, non-stroke neurologic illnesses such as multiple sclerosis were associated with the highest out-of-pocket expenditures (mean US$34,167), followed by diabetes (US$26,971), injuries (US$25,096), stroke (US$23,380), mental illnesses (US$23,178), and heart disease (US$21,955),” the researchers wrote.

For a full copy of the report, go here.

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