Medical debt, and the battle over health care

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The Obama administration’s proposed overhaul of the health care system in this country has been met by the fiercest kind of resistance. Outrageous claims have been tossed around with abandon forcing the White House to launch a special website solely combating the most damning charges. In one especially hysterical accusation, Barack Obama’s health care plan was credited with causing forced euthanasia for the elderly.

But what continually confounds me is why so many Americans are outright rejecting any change to the health care system, when it’s that very system that’s leading to a record number of bankruptcies . It’s not just the roughly 47 million uninsured Americans that should be paying attention. In a news conference last week, Obama took to the streets and the bully pulpit. He stressed that health care reform impacts “every American who has ever feared that they may lose their coverage if they become too sick, or lose their job, or change their job.”

And guess what, medical debt plays a large role in bankruptcy. a leading voice in the debate, Aparna Marthur, from the American Enterprise Institute concluded in her research that “nearly 27 percent of filings are a consequence of primarily medical debt.” Elizabeth Warren, the force behind the embattled consumer financial protection agency also registered the role of medical debt in personal bankruptcy findings. In a report produced by Debb Thorne, she concluded that half of all bankruptcies are linked to medical debt.

Now, there’s a new paper, presented on the popular blog creditslips, which adds to the debate. The paper is from Melissa Jacoby at the University of North Carolina and Mirya Holman at Duke. The two women pored over records from the Consumer Bankruptcy Project, which tracks court records and responses from those hit with bankruptcy proceedings. As CreditSlips’ reports: "By combining the methods, we find that nearly four out of five respondents had some financial obligation for medical care not covered by insurance in the two years prior to filing, but only about half of the court records contain identifiable medical debt, and of substantially more modest amounts."

If medical debt for Americans with or without insurance, is forcing hard working people into bankruptcy, it seems high time to review the existing system. Maybe with more data points, knee-jerk resistance will give way to productive debate.

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